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Minister Chinamasa

Mernat Mafirakurewa and Oliver Kazunga Chronicle Reporters
THE government will adopt a multi-pronged approach to deal with the debt overhang that is stifling the country’s economic growth, Finance and Economic Development Minister Patrick Chinamasa said yesterday.Engaging the creditors, he told a media briefing at a Bulawayo hotel, was the most viable option for debt relief, considering that the country did not have capacity to repay.

Zimbabwe owes Bretton Woods institutions and multi-lateral bodies $2,6 billion, the Paris Club $3,8 billion and other creditors $682 million.

Cde Chinamasa said Zimbabwe had no capacity to repay the debts.

“The land reform programme and resulting sanctions that were imposed have caused the arrears, but as far as they (IMF and other creditors) are concerned, they don’t accept that,” the minister told reporters.

“They say it’s because of poor policies and basically I dispute that. It’s not because of poor policies, it’s because our land reform has come at a heavy cost. And one of the costs is sanctions debilitating our economy, incapacitating our economy, and our country failing to meet its international obligations,” he said.

He said it was untrue that each time he attends International Monetary Fund (IMF) meetings in the US, he would be going there to seek lines of credit.

“I’ve noted that there’re a lot of misconceptions about that relationship, to the extent that each time I go there, what’s written in the media is ‘what have you brought back from the IMF?’

“I think that statement comes from gross misconception of our current relationship with the IMF,” said Cde Chinamasa.
“I’m actually going there to find out how we can clear the debt.”

He said the country cannot borrow money from external financiers due to the debt pile-up, adding that the government was working on debt payment plans.

The government was also considering capping domestic debt and arrears, he added.

Earlier, Cde Chinamasa had told delegates attending the Zimbabwe International Business Conference at the ZITF that the high cost structures of doing business were holding back the economy.

He was responding to a question from Confederation of Zimbabwe Industries past president Dr Joseph Kanyekanye who asked how the country could access short-term funding.

The minister said: “To be honest with you, I’m grappling with the cause of the liquidity problem in the economy. Is it a political issue or an economic issue?

“And if it’s a political issue, the solution should be a political one and if it’s an economic issue, the fix has to be economic. But one of the reasons why our economy is in the doldrums is because of the high cost structures in doing business, something that I’ve said time and again.”

He said there was a need for policy clarity especially around the indigenisation programme.

“After all is said and done, what’s also critical is a policy framework, which is why I was very pleased that His Excellency (President Mugabe) pronounced the clarification on foreign direct investment,” Cde Chinamasa said, referring to the President’s Independence Day speech in which he said foreigners could keep a majority stake in Zimbabwean companies depending on the nature of their investment.