A TEAM of experts working on debt restructuring will contribute to Zimbabwe’s discussions with major external creditors in Lima, Peru, during the annual meetings of the International Monetary Fund (IMF) and the World Bank in October, a Cabinet minister has said.
BY TARISAI MANDIZHA
Zimbabwe’s public and publicly guaranteed debt stood at $8,4 billion as at end June 2015. The country has an external debt of $6,7 billion, representing about 47% of gross domestic product and domestic debt of $1,7 billion.
In his Mid-term Fiscal Policy Review, Finance minister Patrick Chinamasa said the way forward on resolving the country’s debt was being co-ordinated by a quadripartite committee with a mandate to develop options for the clearance of the arrears with three multilateral institutions. The committee, chaired by the the Reserve Bank governor, includes officials from the World Bank, the IMF and the African Development Bank.
“The committee’s recommendations will form input into our discussions in October 2015 with the major external creditors in Lima, Peru, during the annual meetings of the IMF and World Bank,” Chinamasa said.
Chinamasa said the government had stepped up re-engagement with all its creditors and had managed to extend pari passu payments to the World Bank, the African Development Bank, the European Investment Bank and the IMF.
“This is also a key step in co-operating with multilaterals, bilateral Paris Club and non-Paris Club creditors,” he said.
“The above efforts are meant to consolidate the initiatives to build consensus among creditors and development partners on ways to resolve our external debt overhang.”
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The minister, however, said the assumption of Reserve Bank debt by the government would raise the stock of government domestic debt to $1,7 billion.
“This will have implications on government debt service, which will rise steeply by about $300 million from 2016.
“This reinforces the need for the 2015 Budget to contain fiscal pressures, including exercising restraint on Treasury bill issuances, as maturing Treasury bills impact on domestic debt service,” he said.
“Furthermore, measures have to be put in place to increase the tenure of domestic debt instruments, including on outstanding Reserve Bank creditors.”
Chinamasa said the economy had been able to access some limited lines of credit in support of developmental projects and programmes, adding that unlocking further financing would be required towards overall debt relief and for the country to also build a track record on repayments.
He added that the government was observing the pari passu principle with regards to loan obligations to multilateral institutions.
