Zim steps up efforts to re-engage creditors

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The government says it has stepped up efforts to clear its external arrears and has increased monthly payments to a number of creditors.

BY VICTORIA MTOMBA

In an April 17 2015 Letter of Intent to the International Monetary Fund, the government said in the absence of a clear strategy to clear the outstanding arrears the country would not be able to reach its growth potential and debt sustainability.

“We have increased our payments to the World Bank, in line with its pari passu requirement and to the African Development Bank along the same lines,” Zimbabwe said in a letter jointly signed by Finance minister Patrick Chinamasa and Reserve Bank of Zimbabwe governor John Mangudya.

“We have started to pay the European Investment Bank. As our payment capacity improves, we will increase our payments to all IFIs (international financial institutions).

“Moreover, we have stepped up our re-engagement with all creditors, with a view to garnering sufficient support to resolve our debt with bilateral creditors. To this end, we will meet with bilateral creditors on the sidelines of the Spring Meetings.”

The Spring Meetings of the IMF and World Bank ran from April 17 to 19 in Washington, DC, United States.

Zimbabwe said the European Union had lifted some of its trade embargoes and resumed development assistance.

Zimbabwe has an external debt of over $9billion seen as an inhibiting factor for the country to access concessionary loans from multilateral lenders.

A debt resolution strategy, adopted by Cabinet last year, is being used to resolve the external debt.

In the debt resolution roadmap, Zimbabwe would be working with IMF, World Bank and the African Development Bank to resolve the debt.

The government pledged to continue treating Special Drawing Rights as its core international reserves and avoid selective debt servicing to bilateral creditors as it may complicate reaching an agreement with creditors on a debt resolution strategy.

“Nevertheless, we will continue to make repayments to all creditors who are providing us with positive net new financing,” the letter read.

Zimbabwe said the current economic situation remained difficult and the government policy continued to focus on improving the country’s growth prospects.

The government said its external position remained precarious with low levels of international reserves, a large current account deficit and growing external deficit mainly financed by short and long-term loans to the private sector.

The government said the Civil Service Commission had been working on streamlining the public sector employment by conducting a restructuring exercise to align ministries staffing with their mandates and to identify duplication and redundancies.

“By end-2015 we expect to complete decentralisation and modernisation of the Salary Service Bureau, which would place a payroll assistant in every district, strengthening control over the wage bill and minimising irregularities,” government said.

“On the expenditure side, we have kept the overall wage bill below budget projections in 2014 and intend to lower it as a share of GDP (gross domestic product) in 2015. To this end, measures to reduce the wage bill will be presented to Cabinet.”