NDAMU SANDU
The African Development Bank Group (AfDB) has advanced US$4.2m in institutional support to bolster Zimbabwe’s capacity in coming up with an arrears clearance and debt resolution roadmap which is key in unlocking fresh lines of credit for the economy.
The support, announced by AfDB president Akinwumi Adesina, comes as Harare has shown commitment to resolve its US$14.4bn external debt and has appointed the banker as the champion to lead the debt resolution process.
“Our commitment is strong as African Development Bank and we are committed to support Zimbabwe in this process with US$4.2m in institutional support that will help to build capacity in coming up with a roadmap towards arrears clearance and debt resolution,” Adesina said.
The AfDB chief was in the country this week for a two-day visit where he met President Emmerson Mnangagwa, senior Treasury officials, the private sector and development partners to “listen, understand and appreciate what needs to be done to get where we need to get to”.
“I will not work alone. I will work closely with the President, Minister of Finance and all the Cabinet members, development partners—multilateral, bilateral and international partners,” Adesina said.
“Zimbabwe cannot run up a hill for its economic recovery and prosperity if it is carrying a backpack of sand. That backpack is heavy; it’s about US$13.5bn of external debt.”
Zimbabwe remains in debt distress with an unsustainable Public and Publicly Guaranteed external debt overhang amounting to US$14.4bn, as at 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$6.6bn as at end December 2021.
It owes the World Bank Group (US$1.4bn), AfDB (US$681m) and the US$344m to the European Investment Bank.
Despite the debt, Zimbabwe has been making token payments quarterly to AfDB and the World Bank. Zimbabwe has also been active and reliable shareholders of the AfDB paying its subscription in a “very tough environment” and participating in the general capital increase of the bank, Adesina said.
He wants parties to plant seeds of hope.
Asked on the timeframe Adesina said for “everything under the sun, there is a time and season”.
Adesina’s visit comes three months after a team from the bank led by vice president Yacin Fal came to Zimbabwe where it met the government and development partners.
It also comes after Adesina was in February appointed the champion to lead the arrears clearance and debt resolution process.
According to the Arrears Clearance and Debt Resolution Strategy document, Zimbabwe has been exploring traditional debt relief options, including the Highly Indebted Poor Country (HIPC) Initiative, which provides maximum debt relief for beneficiary countries. If the window for the HIPC Initiative is available, Zimbabwe is keen to participate in the HIPC Initiative process in order to benefit from maximum debt relief. This would require a modification or exception granted by IDA’s Executive Board, to the World Bank HIPC Initiative eligibility criteria, for the reclassification of Zimbabwe as an IDA-only country. This will also require IMF’s Board grandfathering of Zimbabwe to the HIPC Initiative, the strategy said.
If the HIPC Initiative is not available, Zimbabwe would use a combination of its own resources and bridge concessional loans from bilateral development partners who are willing to channel their excess resources to support Zimbabwe’s Arrears Clearance, Debt Relief and Restructuring Strategy.
