Zimbabwe will clear arrears amounting to $1.86bn owed to international creditors such as the International Monetary Fund by the end of next year April, the finance minister has said, a move that will see the country unlock avenues for new funding.
President Robert Mugabe’s government began defaulting on its debt to the IMF, World Bank, African Development Bank and several other Western lenders in 1999, and is now struggling to emerge from a catastrophic recession that ran for a decade until 2008.
Zimbabwe is now running a hand-to-mouth budget due to lack of payment support and also starved of foreign credit. This has left the country with virtually no money for other critical agenda such as infrastructural development.
Finance Minister Patrick Chinamasa said that he presented Zimbabwe’s plans to clear its arrears to creditors on the sidelines of the IMF and World Bank meeting in Lima, Peru on Thursday.
Zimbabwe owes the World Bank $1.15bn, the African Development Bank $601m and the IMF $110m.
“The strategy that was presented by government entails clearing Zimbabwe’s arrears … through a combination of using the country’s own resources, arrangement of bridge finance with regional and international banks and the usage of bilateral loans,” Chinamasa said in a statement.
“I am pleased to report that there was strong endorsement among creditors to support Zimbabwe’s strategy,” he said.
Chinamasa also said that his road-map to creditors would give international lenders time to develop a new financing program for Zimbabwe.
The IMF said on September 21 that it might resume financial support to Zimbabwe as early as 2016 if foreign creditors accepted Harare’s arrears clearance plan and the government implemented economic reforms to boost growth.
Zimbabwe’s economy is expected to grow by 1.5% this year, half the initial official forecast due to weak commodity prices that have hit mining exports and a drought that has left more than 1.5 million people in need of food aid.