Zimbabwe cannot resolve its external debt arrears without debt relief within a comprehensive arrears clearance framework supported by donors, an executive of the International Monetary Fund Moeketsi Majoro says.
In a statement which was released ahead of the International Monetary Fund team’s visit to Zimbabwe, Majoro said Zimbabwe was already committed to clearing its debt and had approved an Accelerated Arrears Clearance, Debt and Development Strategy.
This programme was aimed at facilitating re-engagement with creditors on arrears clearance, new financing and comprehensive debt relief including debt reconciliation and validation.
Zimbabwe’s external debt stood at $8.8 billion at the end of last year out which $5.95 percent was arrears. The debt is 118 percent of the country’s gross domestic product and arrears constitute 67.4 percent of the debt.
The country’s debt to international financial institutions- The IMF, World Bank, African Development Bank and the European Investment Bank- stood at $1.69 billion. The debt to the IMF was $134 million all of which was in arrears.
Majoro said Zimbabwe had paid $4.05 million to the IMF in 2010 and had promised to make further payments but the country was in debt distress.
“Already, the public debt sustainability analysis, suggests that Zimbabwe’s overall debt is unsustainable in light of the fiscal policy implementation and the current size and evolution of the debt stock,” he said.
“My Zimbabwean authorities regard a SMP (Staff Monitored Programme) as very critical to their economic restructuring and medium-term growth efforts. Of the two markers set by staff for the SMP, the authorities have met one (timely data reporting), and are committed to meeting the second (eliminating ghost workers).”
Majoro said Zimbabwe had come a long way in improving its relations with the Fund and in implementing policies in line with Fund’s advice in spite of the enormous challenges.
The most critical of these challenges was building political consensus for implementing corrective policies which had already begun.
“In this sense, while acknowledging that much still needs to be done, my authorities feel that the Fund should be more accommodative in handling the request for a Staff Monitored Program (SMP) which would provide a good environment for continued implementation of strong policies and the much desired structural reforms. They will also appreciate Fund’s consideration for a debt relief within a comprehensive arrears clearance framework supported by donors,” he said.
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