Zimbabwe set to clear World Bank and African Development Bank arrears

Although his statement did not disclose the conditions laid out by Zimbabwe, both he and central bank governor John Mangudya have said the country would use bridge finance from the African Export and Import Bank (Afreximbank) to pay off $819 million to AfDB ($585 million), the AfDB’s African Development Fund ($16 million) and the World Bank’s International Development Association (IDA), $218 million.

Last July, following a visit to the United Kingdom, Chinamasa and Mangudya announced that Zimbabwe would rope in New York listed financial advisory and asset management giant Lazard in a separate effort to raise funds to clear $896 million arrears with the World Bank.

Initially, Zimbabwe had hoped to secure a bilateral loan from “a friendly country”, believed to be Algeria, but abandoned this plan.

Instead, Lazard has reportedly put together a consortium of international banks, including Britain’s Standard Chartered Plc, to raise the funds.

Standard Chartered confirmed the plan last December, following criticism by rights activists that the bank was working on a bail-out plan for President Robert Mugabe’s government, which is accused of widespread abuses, a charge the veteran ruler denies.

The bank said it would only proceed with the Zimbabwe plan if the UK government approved it.

Although Zimbabwe’s government has not provided details of the loan package Lazard is putting together, a report by the private weekly Zimbabwe Independent last December suggested Harare would use gold to secure the loans.

Zimbabwe’s economy declined by as much as 50 percent between 2000 and 2008 but grew by double digits between 2010 and 2012 after informal dollarisation under a power-sharing government formed by Mugabe and the opposition ended a hyperinflation crisis.

The economy has flatlined since Mugabe’s 2013 re-election and is in the grips of a liquidity crisis caused, in part, by low levels of production in key sectors such as agriculture, mining and manufacturing. – The Source

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