ZIMBABWE’S debt overhang is weighing heavily on the economy, as the country cannot borrow from multi-lateral institutions because of its failure to honour its obligations.
NATHAN GUMA
President Emmerson Mnangagwa made the admission as he opened the Second Structured Dialogue Platform Meeting on the Arrears Clearance and Debt Resolution Process on Thursday.
“Zimbabwe’s debt overhang continues to weigh down heavily on our development efforts. We have no access to new lines of credit, including from the multilateral banks, such as the World Bank Group,” he said.
“The Zimbabwean Government and the African Development Bank Group agreed therefore, to put this Structured Dialogue Platform in place, to provide space for constructive and structured dialogue on arrears clearance and debt resolution.“
With a total consolidated debt of Zimbabwe 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.
The country is also in arrears for servicing its debt, with arrears to multilateral development banks, including the African Development Bank (AfDB), the World Bank, and the European Investment Bank.
AfDB president Akinumwi Adesina said debt has been continually sinking the economy, hence the need for its resolution.
“While token payments are being made to service the debt, it is now time for a comprehensive arrears’ clearance, debt resolution and debt restructuring for Zimbabwe. Zimbabwe cannot run up a steep hill of economic recovery carrying a heavy backpack of debt on its back,” he said.
“The once thriving private sector of Zimbabwe has imploded. International banking has almost dried up with 102 correspondence banking relations lost in the past one decade. Today, 90% of the economy is now informal.
“Zimbabwe’s once thriving contribution as the nerve centre of the Sadc region has been broken, lowering regional trade and investments. The once thriving National Railways of Zimbabwe, with a rolling stock of 12.5 million tonnes in the 1990s now accounts for under 2.5 million tonnes. The number of people living in extreme poverty now stands at 44%.
“The people of Zimbabwe have suffered enough. The young people of Zimbabwe deserve to have their once prosperous country back. They cannot continue to suffer for a past they did not create. They deserve a new and prosperous future. It is time now to rebuild what has been broken; it is now time to refrain from casting stones; it is now time to heal; it is now time for peace,” Adesina said.
Adesina said AfDB has been helping Zimbabwe during difficult times.
“Zimbabwe has not been alone. At the African Development Bank, the Zimbabwe Multi-donor Trust Fund helped to provide succour to the population over the years. With a total financing of close to US$150 million, it rehabilitated essential infrastructure such as water, sanitation, and energy distribution, benefitting 5 million people.
“I would like to thank the donors to the Fund, namely Germany, Switzerland, Sweden, UK, Norway, Denmark, and Australia for their generous support that made this possible. I would like to assure the government that you will not be alone.”
