Debt logjam: Meetings underway
FINANCE minister Mthuli Ncube on Thursday held crunch meetings with three sector working groups tasked with breaking the country’s debt logjam ahead of the next leg of the structured dialogue which has commenced in Harare.
The debt ridden-nation established a structured dialogue platform with all creditors and development partners in order to institutionalise negotiations on economic and governance reforms to underpin the arrears clearance and debt resolution process.
Following the structured meetings held last December, in February and March this year, three sector working groups were established on Economic Reforms, Governance Reforms and Land Tenure Reforms, Compensation of former commercial white farmers and the resolution of Bilateral Investment Protection and Promotion Agreements.
Sources said the sector working groups (SWGs) met earlier on in the week and deliberated on the matrices.
“A lot of ground has been covered since December and now it is time for the real meaty issues,” a diplomatic source said.
“The finance minister will receive presentations from the working groups before the next high-level meeting. The land working group is led by the Office of the President and Cabinet; the International Monetary Fund (IMF) chairs the economic group and the European Union and the Justice ministry jointly chair the governance cluster.”
Ncube confirmed in a statement that another high-level meeting would be held next Monday. “Following our third meeting, the Economic Sector Working Group met on 8 May 2023, the Sector Working Group on Land Tenure Reforms, Compensation of FFOs and the resolution of BIPPAs met on 9 May 2023, while the Governance SWG met yesterday, 10 May 2023,” Ncube said.
“I am happy to announce that all the three Matrices have broadly been agreed upon and are now awaiting feedback from Development Partners, following consultations with their Capitals. I implore our Development Partners to expedite consultations with your Capitals/ Headquarters so that the three Matrices can be signed off and endorsed by the Government.”
Next Monday, former Mozambican president Joaquim Chissano and African Development Bank (AfDB) chief Akinwumi Adesina will chair a High-Level Resolution Forum in the capital where they will be apprised on the three draft policy reform matrices and map the way forward with structured dialogue platform meetings.
Adesina was appointed to lead the whole process while Chissano plays the role of high-level facilitator. This week, Ambassador Nuno Tomas, adviser to the High-Level Facilitator (Chissano) attended all the three SWG meetings.
After several failed attempts to settle arrears with international financial institutions (IFIs) such as the World Bank and AfDB, which all enjoy preferred creditor status, Zimbabwe, which has been struggling to access long-term concessional funding, adopted a new strategy which is led by AfDB.
With a total consolidated debt of US$17.5 billion, Zimbabwe owes international creditors US$14.04 billion, with domestic debt pegged at US$3.4 billion. Debt owed to bilateral creditors is estimated at US$5.75 billion, while multilateral creditors are owed an estimated US$2.5 billion. Zimbabwe is the only regional member country of the AfDB group under sanctions due to arrears amounting to nearly US$736 million.
The regional lender estimates that as of 31 December 2022, the figure stood at US$750 million. Zimbabwe is also in arrears with the World Bank amounting to US$1.47 billion and the European Investment Bank (US$372 million) out of the US$14 billion external debt.
According to the new debt plan, Zimbabwe is exploring traditional debt relief options, especially the Highly Indebted Poor Country (HIPC) Initiative, which provides maximum debt relief for beneficiary countries and nonHIPC initiatives.
As part of re-engagement with IFIs and other creditors, the Zimbabwean government in March 2021 resumed making quarterly token payments to the multilateral development banks, the World Bank Group (US$1 million), the African Development Bank Group (US$500 000) and the European Investment Bank (US$100 000).
Treasury also began making quarterly token payments amounting to US$100 000 to each of the 16 Paris Club bilateral creditors in September 2021, as a sign of its commitment to the engagement and re-engagement process with the international community.