Zimbabwe will clear arrears of $1.86 billion to international creditors such as the International Monetary Fund by the end of next April, the finance minister said on Friday, a major step towards unlocking new funding.
President Robert Mugabe’s government started defaulting on its debt to the IMF, World Bank, African Development Bank and several Western lenders in 1999 and is struggling to emerge from a catastrophic recession that ran for a decade until 2008.
I am pleased to report that there was strong endorsement among creditors to support Zimbabwe’s strategy
Without any balance of payment support and starved of foreign credit, Zimbabwe is running its budget hand-to-mouth, leaving it with virtually no money for infrastructure.
Finance Minister Patrick Chinamasa said he presented Zimbabwe’s plans to clear arrears to creditors on the sidelines of the IMF and World Bank meeting in Lima, Peru on Thursday.
Zimbabwe’s arrears to the World Bank stand at $1.15 billion while those to the African Development Bank and IMF are $601 million and $110 million respectively.
“The strategy that was presented by government entails clearing Zimbabwe’s arrears … through a combination of using the country’s own resources, arrangement of bridge finance with regional and international banks and the usage of bilateral loans,” Chinamasa said in a statement.
“I am pleased to report that there was strong endorsement among creditors to support Zimbabwe’s strategy,” he said.
Zimbabwe’s economy is expected to grow by 1.5 percent this year, half the initial official forecast due to weak commodity prices that have hit mining exports and a drought that has left more than 1.5 million people in need of food aid.
Chinamasa said his roadmap to creditors would give international lenders time to develop a new financing programme for Zimbabwe.
The IMF said on Sept. 21 it might resume financial support to Zimbabwe as early as 2016 if foreign creditors accepted Harare’s arrears clearance plan and the government implemented economic reforms to boost growth.