AfDB, WB teams in Zim

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Teams from the World Bank and the African Development Bank (AfDB) are in Zimbabwe on the country’s arrears clearance plan and strategy paper.

BY VICTORIA MTOMBA

Finance minister Patrick Chinamasa
Finance minister Patrick Chinamasa

The visit comes after Zimbabwe presented a term sheet on how it would clear its arrears to the three preferred creditors —the International Monetary Fund (IMF), World Bank and AfDB.

Zimbabwe owes the three institutions a combined $1,8 billion and has promised to have cleared the debt by end of September.
Sources indicated that 16 members from AfDB arrived this week on a one-week mission.

Zimbabwe owes the AfDB $601 million.

“The team came to consult various stakeholders and agree on the country strategy paper. They will collect data information and statistics related to the debt clearance,” the sources said.

Zimbabwe also owes the World Bank Group $1,1 billion.

Central bank governor, John Mangudya confirmed the visit by AfDB and a team from the World Bank.

Mangudya said the country was on track to clear its $1,8 billion arrears.

He said Zimbabwe was expected to clear its arrears in September before the AfDB and World Bank board meetings.

Mangudya said after the payment, the country could be able to access funding from the international financial institutions.

In May, Finance minister Patrick Chinamasa said technical teams from the AfDB and World Bank would visit the country to vet the country’s arrears clearance plan.

According to an arrears and debt clearance plan presented on the sidelines of the IMF/World Bank annual meeting last year, Zimbabwe said it would get a bridge loan facility arranged by its debt advisors, the African Export-Import Bank, to clear its outstanding arrears to AfDB ($585 million) and African Development Fund ($16 million).

The bridge loan could be repaid using inflows from the Fragile State Facility of the AfDB.

The second phase entailed using country’s Special Drawing Rights holdings to clear the $110 million owed to IMF.

Zimbabwe said it would use a medium to long-term loan to clear its $1,1 billion arrears to the World Bank Group. It said the loan would have a tenure of 10 to 15 years at an interest rate of 5-7% per annum. It would be re-paid as a bullet payment, that is, the entire loan plus interest are payable at the end of the loan tenure.

Zimbabwe owes the International Bank of Reconstruction and Development (IBRD) $896 million. A unit of the World Bank Group, IBRD provides loans and assistance to middle income countries. Zimbabwe also owes the International Development Association (IDA) $218 million. IDA is a World Bank unit which helps the world’s poorest
countries.