‘Arrears clearance hinged on strength of economy’

ZIMBABWE’S capacity to clear its external debt and meet its obligations is hinged on the strength of the economy hence the Government is seized with rolling out critical reforms aimed at attracting more investment and stimulating domestic growth, Finance and Economic Development Minister, Professor Mthuli Ncube, has said.

Zimbabwe has about US$8 billion external debt and the domestic debt is about $12 billion, according to the Treasury.

The external debt is mainly owed to the African Development Bank, World Bank, European Investment Bank and other bilateral creditors.

The arrears have a huge bearing on country risk or credit worthiness, which cripples efforts to secure fresh lines of credit and foreign direct investment.

Although the country has started making token payments to its creditors, the Government’s desire is to negotiate for a final debt restructuring agreement as part of its international re-engagement drive.

Updating delegates during the 2020 Annual Meetings of the African Development Bank (AfDB) Group which ended last Thursday, Prof Ncube said the Government was committed and continues to engage various creditors for arrears clearance.

He said the ongoing efforts were expected to open access to new development financing for the economy.

“It should be noted that the country’s capacity to clear old arrears and meet obligations arising from new financing hinges on the strength of the economy, which in turn requires implementation of deep reforms under the TSP (Transitional Stabilisation Programme),” he said.

“Government has started making token payments to the bank (AfDB), the World Bank and the European Investment Bank, thus indicating our strong commitment towards the debt arrears clearance process.

“In addition, the Government is still committed to discussing with the International Monetary Fund (IMF) a recalibrated Staff Monitored Programme in order for us to continue to build a successful track record of sound policy towards a future financial fund supported programme.”

Meanwhile, Prof Ncube said the Government continues to pursue sound macro-economic and financial management policies with the country now on “a new trajectory” accompanied by key reforms that seek to stimulate domestic production, export growth and the rebuilding and transformation of the economy.

“The reforms are meant to drive economic development on a platform of progressive re-engagement with the international community in line with the Vision 2030,” he said.

In view of this, Prof Ncube said this year’s national budget marked the transition from austerity to a growth stimulation and employment generation era.

Strong emphasis is now on reviving key sectors of the economy through promotion of production-oriented investment and productivity, without losing focus on fiscal responsibility.

Government has also increased focus enhancing productivity for growth, job creation, equitable development and strengthening social safety nets, competitiveness and building long term resilience of the economy.

Prof Ncube, however, noted that the economy has been confronted by a number of challenges as a result of major shocks from multiple fronts.

These include the impact of climatic change shocks in the form of 2019/20 drought and Cyclone Idai, energy challenges, currency volatility and the outbreak of the Covid-19 pandemic.

The developments have seen Government revising 2020 growth projection from three percent to negative four percent with contraction now impacting across all productive sectors of the economy.–chronicles.c.zw

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