THE European Investment Bank (EIB), one of Zimbabwe’s multilateral creditors, says it is keen to work with the southern African nation as Harare seeks to settle arrears and normalise relations with the international community.
BERNARD MPOFU
The continuing accumulation of arrears is also seriously undermining the country’s credit rating and severely compromising the ability to attract foreign direct investment. It is also hampering efforts to mobilise direct budgetary and balance of payments support.
Senior officials from the EIB were in Zimbabwe this week to assess the performance of the current €40 million credit facility extended to the country’s private sector earlier on this year. The team also had meetings with the World Bank and International Monetary Fund.
The officials included Jim Hodges, head of EIB representation for southern Africa and Indian Ocean.
The EIB said as one of Zimbabwe’s main international creditors, the regional bank will participate in the dialogue platform established by the government to implement its arrears clearance, debt relief and restructuring strategy.
“Our visit will allow us to assess the success of the current EIB EUR40 million credit facility to the private sector and continue dialogue with the Minister of Finance and Economic Development, the Governor of the Reserve Bank of Zimbabwe in coordination with key partners including the Bretton Woods Institutions (World Bank Group and International Monetary Fund) and African Development Bank,” said Diederick Zambon, the EIB head of division for sub-Saharan Africa in a statement.
“The EIB supports the efforts of the authorities to achieve debt sustainability and unlock external financing which is key to achieve the objectives of the National Development Strategy 1 (NDS 1).”
Jobst von Kirchmann, ambassador of the European Union to the Republic of Zimbabwe, said the regional bloc is considering extending more financial facilities to the country’s private sector.
“The European Investment Bank is the lending arm of the European Union. It is the biggest multilateral financial institution in the world and one of the largest providers of climate finance. I am very proud that our bank could setup a private lending facility in Zimbabwe”, von Kirchmann said.
Official figures from Treasury show that the country remains in debt distress, with an unsustainable public and publicly guaranteed (PPG) external debt overhang amounting to US$14.4 billion as at the end of December 2021.
The country has been unable to meet its debt servicing obligations and has, therefore, been accumulating external debt arrears since 2000, which are now estimated at US$6.6 billion as at the end of December 2021.
PPG external debt owed to the multilateral creditors, as at the end of December 2021, amounted to US$2.7 billion, of which US$1.5 billion is owed to the World Bank Group, US$711 million to the African Development Bank, US$358 million to the European Investment Bank, and US$66 million to other multilateral creditors.
On the other hand, bilateral PPG external debt as at the end of December 2021 amounted to US$5.6 billion, with US$3.9 billion owed to the Paris Club creditors and US$1.8 billion owed to Non-Paris Club creditors.
