Finance Minister, Mthuli Ncube, has committed to start paying close to US$3bn the country owes to the Paris Club creditor nations, starting this second half of the year as Zimbabwe seeks to normalise relations, Business Times can report.
Presenting the Mid-Term Fiscal Policy Statement Thursday, Ncube said:
“We are going to pay the Paris Club members. We will begin in the second half of 2021. All will be paid. We have written to them, and they are sending their bank details.”
Apart from the Paris Club creditors, non-Paris Club creditors are owed close to US$1bn.
Zimbabwe is saddled with more than US$1Obn in external debt, which is about 72% of the gross domestic product.
This means after settling the US$4bn to Paris and non-Paris Club creditors, Zimbabwe will also have to settle more than US$6bn to other international creditors including multilateral financial institutions such as the World Bank (WB) and the African Development Bank (AfDB).
While Zimbabwe cleared the US$107.9m owed to the International Monetary Fund in 2014, Harare still owes the WB US$1.3bn, the AfDB (US4680m and the European Investment Bank (US$308m).
The debt has stalled the inflow of cheap fresh capital into Zimbabwe from international financial institutions required to reboot the economy.
The administration is also saddled with approximately ZWL$21bn in domestic debt.
Failure to clear arrears of the debt, the country will not be able to access fresh capital.
The Paris Club is an informal group of official creditors whose role is to find coordinated and sustainable solutions to the payment difficulties experienced by debtor countries. As debtor countries undertake reforms to stabilise and restore their macroeconomic and financial situation, Paris Club creditors provide an appropriate debt treatment.
Ncube also revised the GDP growth for this year to 7.8% from the initial 7.4% buoyed by a boom in commodity prices, stable exchange rate and higher rainfall season.
He said cumulative revenue collections for the period January to June were ZWL$198.2bn against a projection of ZWL$182.1bn.
Overall expenditures during the period Jan to June January to June 2021 stood at ZWL$197.6bn above the target of ZWL$189.8bn
Ncube said the 2021 National Budget still faces pressures related to the need to procure sufficient vaccines and other Covid-19 related expenditures, despite “marginal budget surplus”.
Aggregate deposits amounted to ZWL$321.8 billion as at June 30 which represented a 57.64% increase from ZWL$204.13bn as at December 31 2020. FCA deposits amounted to $1.5bn, the highest since independence.