Zimbabwe Seeks Debt Relief to Deal with COVID-19 Economic Impact

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Zimbabwe is seeking talks with foreign creditors to clear decades of debt, warning that without more funds the cash-strapped government may not cope with the economic impact from COVID-19.

Zimbabwe’s struggling economy has further slumped due to the lockdown over the coronavirus.  But critics of the request note Zimbabwe’s history of corruption and failure to service its debt.

Zimbabwe’s minister in charge of mobilising resources to fight COVID-19, July Moyo, says the country is now relying on its “usual friends,” after the International Monetary Fund refused to provide funds to help the southern African nation reduce the impact of the COVID-19 pandemic.

“As you know the IMF was asked by the U.N, secretary-general [António Guterres] and an appeal was made to say indebted countries, IMF should give them a reprieve,” he said.

“But for Zimbabwe we could not be given a reprieve because we hadn’t paid our debt.  But the World Bank has been giving us assistance… our PPEs and certain medicines — the World Bank is funding.

“So, we are getting assistance from our usual friends; the Chinese, the British, the Americans, European Union, the Indians and some from our neighbors in southern Africa, even if they are also suffering from [the] coronavirus pandemic.”

Zimbabwe’s minister of finance Mthuli Ncube wrote to the IMF for financial assistance and cancellation of its debt so the country could divert its funds to fight the COVID 19 pandemic.

But Tendai Biti, an opposition leader and a former finance minister, says Zimbabwe does not deserve assistance from the IMF or international creditors.  He says due to corruption and excessive spending, Zimbabwe was in a crisis long before COVID-19 pandemic.

“That embarrassing long letter [to IMF] that accepts and acknowledges that the economy contracted by six percent in 2019 and in 2020 our contraction is minus 20 percent; the worst in the history of the country.  So, no one should hide under COVID 19,” he said.

But not everyone agrees with the opposition’s view.

Trust Chikohora, an independent economic analyst, says President Emmerson Mnangagwa’s government should get financial support to kick start Zimbabwe’s fragile economy and limit the effects of COVID-19 pandemic.

“As everybody is aware Zimbabwe does not have resources at the moment to do this because of the state of the economy.  And so multilateral institutions should support Zimbabwe in order to contain this pandemic which is global in nature and so not withstanding any previous positions that institutions could be holding or that other countries may be holding,” said Chikohora.

Zimbabwe is not one of 25 countries benefitting from an IMF program designed to help address the impact of the COVID-19 pandemic.

An official at the IMF said the organisation would explain that position sometime this week.