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Finance minister Mthuli Ncube


Ncube battles debt logjam



FINANCE minister Mthuli Ncube this week faced a herculean task as the debt-ridden nation made frantic efforts to break its debt jinx with creditors as he held a series of meetings with a senior United States Treasury official, a United Kingdom envoy and senior executives from multilateral financial institutions, The NewsHawks has learnt.


Currently battling a huge debt overhang which has worsened the country’s sovereign risk profile, the authorities in Harare have been left with few options except seek debt forgiveness and seek bridge financing from potential sponsors.

But most Western powers doubt President Emmerson Mnangagwa’s sincerity in effecting a raft of economic and political reforms needed to normalise relations with creditors and the international community.

At the turn of the millennium the US enacted the Zimbabwe Democracy and Economic Recovery Act (Zidera) over Zimbabwe’s worsening human rights record and charges of electoral fraud.

Under Zidera, Washington can veto any financial support extended to Zimbabwe by Bretton Woods institutions, most notably the World Bank and International Monetary Fund, if Harare reneges on its promise to undertake reforms.

Harare strongly opposes the foreign policy tool, saying it is Washington’s ploy to effect regime change following the controversial land reform programme which saw thousands of white commercial farmers losing swathes of land to locals.

Information gathered by The NewsHawks shows that Ncube flew to the United States with a delegation which includes his deputy Clemence Chiduwa, Reserve Bank of Zimbabwe governor John Mangudya, head of Zimbabwe’s Aid and Debt Office Andrew Bvumbe, Treasury secretary George Guvamatanga and other government officials.

In Washington, the finance minister met US deputy assistant secretary for Treasury Eric Meyer on Tuesday, US deputy assistant secretary of State Akunna Cook where he attempted to convince the bureacrats that Harare had turned the leaf.

The US and the UK have in recent times raised the red flag over growing political intolerance and the shrinking of democratic space following Mnangagwa’s ascendany in 2017. Harare, on the other hand, cites the repealing of the draconian Access to Information and Protection of Privacy Act, Public Order and Security Act among some of its political reforms. However, critics say these laws have been replaced by equally repressive ones.

Ncube was scheduled to meet World Bank executive director for France Arnaud Buisse, IMF deputy managing director Antoinette Monsio Sayeh, president of Structured Credit International Corp Mahesh Kotecha and United Kingdom special envoy Nick Dyer, among other movers and shakers.

Three multilateral creditors, the World Bank, International Fund and the African Development Bank, will this week hold annual meetings in the US at a time Zimbabwe is making frantic efforts to engage with financiers and sponsors to help her retire her debt.

Ncube recently told an economic symposium that there is a plan to address the nagging debt issue.

“Progress has been made in developing an Arrears Clearance Strategy with support provided from the IMF and World Bank. Engagement is ongoing with various potential sponsors, which is necessary before arrears with selected multilateral creditors can be addressed. Government has begun sharing Arrears Clearance Strategy,” Ncube said.

Just last week, the IMF revealed that Zimbabwe is pushing to be classified a Heavily Indebted Poor Country (HIPC), as the country seeks debt relief in what could be a volte-face on the long-held official aversion to the initiative.

The nation remains in debt distress, battling to access long-term cheap capital from multilateral lenders like the World Bank, African Development Bank and the IMF. With limited budgetary support, Zimbabwe has over the years relied on internal resources and loans with usurious interest rates to finance some of its critical projects.

Following several failed attempts to settle the ballooning debt such as the Zimbabwe Accelerated Arrears Debt and Development Strategy (ZAADS) and later the Lima Plan of 2015, Zimbabwe, according to the IMF, is now pursuing the HIPC model, which during the Government of National Unity was frowned upon by Zanu PF.

During the tenure of the power-sharing government which comprised Zanu PF and two MDC factions, hawkish Zanu PF politicians rejected proposals made by then Finance minister Tendai Biti to pursue the HIPC initiative, arguing that the country was not poor.

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