Finance minister Patrick Chinamasa presents the mid-term fiscal policy review tomorrow with the economy unravelling rapidly, compounded by rising civil unrest over President Robert Mugabe’s management of the country.
Zimbabwe’s economic revival, which saw an average growth of seven percent between 2009 and 2012, has come off following President Mugabe’s disputed re-election in 2013.
Chinamasa has five key challenges to address.
1-The foreign debt albatross
Zimbabwe is trying to emerge from years of international isolation and desperately needs to woo back international lenders.
The southern African nation remains a Foreign Direct Investment (FDI) leper, receiving just $510 million of the $5 billion worth of FDI that the region got in 2015, according to the United Nations Conference on Trade and Development.
But it has to settle a foreign debt of $8.3 billion, of which $1.8 billion is in arrears.
It owes $110 million to the IMF, $600 million to the African Development Bank and $900 million to the World Bank.
Its re-engagement process was predicated entirely on being able to secure new funds from the lenders before the end of the year.
How is Zimbabwe going to repay the debts?
It has so far missed its self-imposed deadline of June, which would have opened the possibility of IMF loans – the first since 1999 – in the third quarter of the year.
In July, Zimbabwe reportedly clinched a deal with the African Export-Import Bank (Afrexim) and U.S. investment bank Lazard to “mobilize” $1.1 billion to clear some of the debt, opening up the possibility of accessing credit.
But the IMF has emphasised the need for overhaul of economic policy and a plan for debt sustainability before it considered disbursing funds.
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