A last chance saloon
The structured dialogue platform on arrears clearance and debt resolution process opens in Harare today as Zimbabwe seeks to normalise relations with international financial institutions and bilateral creditors to access cheap lines of credit.
The meeting, the second since December, comes as Zimbabwe seeks to clear the US$14.4bn debt to multilateral and bilateral creditors.
On its part, Zimbabwe has indicated seriousness of the highest level demonstrated by the appointment of former Mozambican President Joaquim Chissano as high level facilitator and the indefatigable AfDB president Akinwumi Adesina as the champion of the process.
Touted as Africa’s optimist in chief, the top banker will be coming to Zimbabwe for the second time since his last visit in July.
Zimbabwe certainly has to extricate itself from the debt overhang and the December meeting set tone for a process after the agreement on three pillars: economic reforms, governance reforms and land tenure and compensation of former farmer owners including resolution on the Bilateral Investment Protection and Promotion Agreement.
Zimbabwe has struggled to pay the US$3.5bn compensation to former farm owners and has shifted goalposts several times as resources remain elusive.
Its proposals have been dismissed by former farm owners that want a quick resolution as some of its members are aging.
Today’s match making meeting between Zimbabwe and its creditors is crucial as it offers a chance for the former to present a credible plan which is acceptable to the latter.
Zimbabwe has shown seriousness in clearing the arrears, beginning with token payments while it cobbled a credible plan to extinguish the debt.
The appointment of Adesina to champion the process was within that thrust and the appointment of former Mozambican President Joaquim Chissano as high level facilitator amplifies the existence of regional political will.
Such is the high level meeting that it will have multilateral and bilateral creditors in one room.
As one analyst said last night Zimbabwe should not use that meeting to commit suicide but to offer credible timelines cognisant of the challenges confronting the economy.
There are some housekeeping issues that have to accompany the process—political and governance reforms. The litmus test for the commitment is the upcoming harmonised elections. In the past, economic and political reforms have been the biggest casualty in the run to elections.
It is not the first time that Zimbabwe has embarked on a plan to clear the arrears. About 10 years ago and in the Peruvian capital, Lima, the southern African country presented a plan that was endorsed by creditors on the sidelines of the IMF/World Bank annual meetings. The plan failed to take off. Successive ministers of Finance have in the past cobbled plans to resolve the crisis and would falter in the absence of one enabler—political will.
President Emmerson Mnangagwa has assured Adesina of political will to midwife the process. For Finance minister Mthuli Ncube, this is not the opportunity to seek glory. Consultations, consultations and consultations are key in coming up with a credible plan. Zimbabwe should leverage on the existing goodwill.
