Treasury crafting new plan to tackle Zim’s $10bln debt

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FINANCE minister Patrick Chinamasa says he will soon table a new debt plan to Cabinet while the delayed mid-term fiscal review statement will be announced on Thursday against the backdrop of stalling economic activity.
Addressing a breakfast meeting organized to explain deals signed during a high level visit to China late last month in a bid to seek aid to bankroll the country’s infrastructure projects, Chinamasa said the country’s external debt, at $10 billion, continues to block access to fresh funding and its resolution would bring the economy on the growth path.
Lack of long term financing to replace ageing machinery is seen as one of the main reason that has made the local manufacturing sector uncompetitive. This, in turn, has resulted in the country becoming a net importer.
Zimbabwe launched a debt clearance plan, dubbed the Zimbabwe: Accelerated Arrears Clearance, Debt and Development Strategy (ZAADDS) in 2012, but nothing much appears to have been achieved under that framework.
“In a few weeks’ time I should be bringing to Cabinet a debt resolution strategy so that we are very clear with that debt and how we are going to resolve it because it remains an albatross around our neck as it were. It inhibits access to fresh capital which we badly require,” Chinamasa said.
He said the International Monetary Fund (IMF) had seconded an official to Zimbabwe in July after a decade-long absence, signaling the restoration of relations between Zimbabwe and multilateral lenders. Chinamasa said Treasury would also engage the Paris Club in tackling the country’s debt.
Zimbabwe in June last year undertook an IMF staff monitored programme (SMP), an informal and flexible instrument for dialogue between the Fund staff and a member country on its economic policies.
The SMP does not, however, entail financial support. The government in July sought another six month extension of the SMP – the first was in January this year – after missing targets.
Chinamasa said the Chinese visit also sought ways of extending financial and technical support to the local private sector which badly needs retooling and working capital.
He added that Zimbabwe was struggling to access Chinese funding due to failure to service its debt with Beijing, estimated at around $1,5 billion.Advertisement

He credited China, now the biggest buyer of the tobacco, crop for the rebound in output which plunged at the height of the economic meltdown in 2008, adding that the government had also engaged Chinese companies with a view to forming a joint venture for exporting cigarettes.
Zimbabwe produced 211 million kg of tobacco worth $672 million this season compared to 160 million kg last year for $594 million, making it the biggest crop in over a decade.