Zimbabwe’s external debt soars

Zimbabwe’s external debt soars

Untitled 4ZIMBABWE’S external debt increased three percent to $11,3 billion last year, nearly 80 percent of the country’s gross domestic product (GDP), as punitive interest on arrears exacerbated pressure, latest Reserve Bank of Zimbabwe (RBZ) data shows.
The country has witnessed rapid expansion in its foreign debt since adopting a hard currency regime in 2009, when external debt amounted to $6,1 billion at the close of that year.
Zimbabwe’s external debt has grown largely due to new payment arrears and interest and penalty charges on existing payment arrears.
Although the central bank did not give figures of external debt already overdue for payment, Finance Minister, Patrick Chinamasa, last year revealed that foreign debt arrears were at $5,1 billion, a sign of significant debt distress. However, an International Monetary Fund (IMF) report indicated in 2011 that international debt arrears amounted to 80 percent of GDP in 2010.
In that report, the IMF highlighted that the country’s external debt stock was “large and unsustainable”.
In October 2015, Zimbabwe and multilateral lenders, the IMF, World Bank and African Development Bank (AfDB) agreed on an arrears clearance programme in Lima, Peru.
The Lima plan, which received lukewarm support from former President Robert Mugabe, faltered during his frenetic last months in office.
President Emmerson Mnangagwa, who replaced Mugabe, has vowed to get the debt plan back on track, in a bid to open fresh loans for the capital-starved country.  
In terms of that plan, endorsed by the international creditors, Zimbabwe was to use a bridge loan of $819 million arranged by the African Export Import Bank to repay $601 million to the AfDB and the $218 million to the World Bank’s International Development Association. The country was to get a long term loan from a bilateral lender to repay the International Bank of Reconstruction and Development $896 million and to use Special Drawing Rights allocations held by the IMF to settle $110 million arrears due to the Bretton Woods institution.
Clearance of these arrears, totalling $1,825 billion, was expected to be completed by June 2016.
Only settlement of IMF arrears was achieved.
Over the years, Zimbabwe’s external debt has progressively risen, according to RBZ figures, from $3,5 billion in 2000 to $10,6 billion in 2015.
The Parliament Budget Office has warned that Zimbabwe’s economy remains fragile, with a “precarious” level of public debt.
According to RBZ statistics, $5,6 billion of the foreign debt is government’s debt to bilateral and multilateral creditors.
Public enterprise debt accounts for $1,4 billion of the total debt as they owe $873 million to bilateral and multilateral creditors.
The private sector accounts for $1,9 billion; the central bank’s foreign debt stood at $490 million at the close of the year.
newsdesk@fingaz.co.zw

  • Rufus

    Ndozvazvinoita. They will make sure you’re always indebted to them. Which African country has ever paid off its debt? We keep borrowing from institutions that were created to keep us in bondage.

    • Nagato

      Botswana with a credit rating rivalling UK and better than USA

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