Zim’s debt payment plan suffers big blow

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BERNARD MPOFU

Zimbabwe’s debt clearance plan has been thrown off the rails after Britain, which had been supporting the programme, said it was unhappy with reports of human rights abuses following last month’s violent nationwide protests.

Official figures show that four people died while many more were injured from gunshot wounds when security forces moved in to quell the violent protests triggered by a 150% rise in the fuel price.

The UK Parliament this week summoned its minister for Africa, Harriett Baldwin, over the political developments in Zimbabwe.

The situation in the country has also prompted President Emmerson Mnangagwa to embark on a diplomatic offensive with regional peers, as well as opening dialogue with the country’s political actors.

Baldwin told a select committee of the House of Commons: “The recent violence from state actors makes it very difficult for me to try and argue that this is the time for UK to be stepping up to the plate and working with international partners to [review sanctions and the debt payment plan]. I think that for progress to be made, progress will have to happen in terms of political reforms in Zimbabwe,” Baldwin said.

Last month, Baldwin held a meeting with the AU Commissioner for Peace and Security, Smail Chergui, where security issues in Zimbabwe, DRCongo and Somalia were high on the agenda.

Baldwin became one of the top UK officials to visit Zimbabwe after the resignation of President Robert Mugabe. Questions sent to Finance minister Mthuli Ncube, who is currently on a re-engagement drive with Western countries, were not responded to at the time of going to press.

Relations between Harare and London turned frosty at the turn of the millennium after Zimbabwe embarked on its land reform programme that resulted in thousands of white farmers from Britain, Netherlands, and Australia being dispossessed of their farms by the government. The relations thawed in 2017 following the resignation of Mugabe.

Following Mugabe’s ouster, critics accused the British of having a soft spot for President Mnangagwa and his administration that succeeded Mugabe’s.

Last May, the UK partnered with the Standard Chartered Bank to lend $100m to Zimbabwe’s private sector in what became the British government’s first direct commercial loan facility to Harare in more than 20 years.

The country is saddled with a debt stock of $16,9 billion, with external debt accounting for approximately $7,4 billion.

Out of this, approximately $5,6 billion is in arrears, even though the country settled its IMF arrears of $107,9 million in November 2016.

Zimbabwe still owes the World Bank $1,3 billion, AfDB $680 million, and the European Investment Bank $308 million.

In the international financial architecture, the IMF, the World Bank Group and the AfDB enjoy a preferred creditors status under a Pari Passu rule, which means their arrears have to be simultaneously cleared first before any other creditor could be considered for payment.

This makes it almost impossible for Zimbabwe to clear its international arrears without a payment plan approved and supported by countries such as the UK, USA and other Western nations.

Meanwhile, Zimbabwe is in need of new capital to reboot the economy. And analysts say only the multilateral financial institutions have the capacity to avail cheap funding to resuscitate the economy.

The analysts, however, warn that the fallout with Britain could open up Zimbabwe to a joint EU action as seen in the past, if London convinces its EU peers that Mnangagwa’s government is not a break from the past, a point which Lawrence Mhandara, a University of Zimbabwe political science lecturer, amply illustrated yesterday by emphasising that Britain was a key actor in Zimbabwe’s foreign policy strategy.

“Britain internationalised the Zimbabwean problem and set the international agenda on the country,” Mhandara said. “To deconstruct the image of Zimbabwe as a pariah state, it was natural that Britain would take the lead.

“But the events of 1 August 2018 and January 2019 have forced Britain to rethink its embrace of Mnangagwa, hence the poignant conclusion that it would neither back the readmission of Zimbabwe into the Commonwealth nor its debt clearance plan. The implication is very simple: Britain has once again set the agenda for the international community’s terms of engagement with Zimbabwe: the agenda of continued isolation of the country.”

Another political analyst, Alexander Rusero, said President Mnangagwa had managed to score where his predecessor failed, but “unfortunately the clock is going back to where Zimbabwe was seen as an outpost of tyranny”.

Rusero continued: “Democracy is the anchor on which Britain can either embrace or shun Zimbabwe. The ball is now in Zanu PF’s court, and it would be foolhardy to support Zimbabwe at this point in time.”