Zim changes arrears clearance plan

Finance minister Patrick Chinamasa

Zimbabwe has changed tack in its arrears clearance plan, resolving to repay its preferred creditors a combined
$1,8 billion in succession instead of doing so simultaneously, new documents have shown.


According to an arrears clearance plan presented last year in Lima, Zimbabwe resolved to repay simultaneously its three preferred creditors — the World Bank, African Development Bank (AfDB) and the International Monetary Fund (IMF).

In a new plan presented at this year’s IMF/World Bank annual meetings, Zimbabwe said it would repay sequentially within a defined period.

The IMF/World Bank annual meetings were held from October 7 to 9 in Washington, the United States.

“The plan no longer envisages clearing Zimbabwe’s arrears to the Fund, the World Bank and AfDB simultaneously, but sequentially within a defined period, through: (i) use of their SDR [special drawing rights] holdings to clear the arrears to the Fund (completed on October 20, 2016); (ii) bridge financing from financial institutions for clearing the arrears to the AfDB; and (iii) loans on market terms to repay the International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA),” IMF staff said in a country report on Zimbabwe.

“As of end-September 2016, Zimbabwe’s total arrears to the IBRD and IDA amounted to $1 156,7 million, and arrears to the AfDB amounted to $632,5m. The authorities also are engaging in discussions with the Europe an Investment Bank on an arrears clearance plan, and plan to seek debt treatment from official bilateral creditors, under the umbrella of the Paris Club.”

The IMF staff report was used to support Zimbabwe’s case against the removal of remedial measures after the country paid its overdue obligation under the Poverty Reduction and Growth Trust (PRGT).

Zimbabwe used its SDR holdings with the IMF to clear the $107,9m overdue obligation to the PRGT.

The remedial measures that were removed include declaration of non-cooperation with the fund, suspension of technical assistance (which had already been partially lifted) and the removal of Zimbabwe from the list of PRGT-eligible countries.