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ZIMBABWE has been making concerted efforts to clear its arrears with the Bretton Woods institutions and so far the country has made good on some of its pledges to offset the debt to the International Monetary Fund and World Bank. The Minister of Finance and Economic Development, Patrick Chinamasa, last year said the country would raise cheaper loans from the Africa Export and Import Bank (Afreximbank) to settle the $601 million arrears with the African Development Bank and use Special Drawing Rights it has with the IMF to settle the $110 million in arrears to the fund.
It would also raise more cheap loan capital to clear the $1,15 billion in arrears to the World Bank. Zimbabwe envisages clearing its arrears to the multilateral institutions in April as a major step towards unlocking new funding.
There was overwhelming support for Zimbabwe’s debt clearance strategy at a meeting of creditors on the sidelines of the IMF/World Bank annual meetings in Lima, Peru last October and so far the country is on track to meeting its deadline. Without any balance of payment support and starved of foreign credit, Zimbabwe’s budget is funded 100 percent from tax collections and most of it goes towards civil service salaries but this has not deterred the country from meeting its obligations to the IMF and World bank because it desperately needs capital injection to kick start key sectors of the economy.
Outlining the strategy, Chinamasa said: “The strategy involves borrowing money at cheaper than what we would otherwise pay under the existing situation, from Afreximbank that loan will clear our loans from AfDB. With respect to our debt to the IMF, we will use our Special Drawing Rights, we have something like $130 million in SDRs. “It is like debt rescheduling — substituting one debt with another but at an affordable rate and with a different timeframe and not suffer the penalties. Much of the debt we have with our creditors is largely penalties arising from default.”
Zimbabwe started defaulting on its debt to the Bretton Woods institutions in 1999 — the last year it got IMF loans — and is battling a slowing economic growth, poor commodity prices that have hurt its mining industry and chronic power shortages that have decimated manufacturing capacity while its industry is in desperate need for cash to retool. With the odds seemingly stacked against him, Chinamasa has been playing a delicate balancing act between meeting the needs of a struggling economy with making periodic payments to the multilateral funders.
Zimbabwe has also been on a charm offensive in the West where it has made contact with various countries keen to invest in the country. There have been several business delegations from the European Union who have visited the country to seek opportunities.
The government is also rationalising the civil service and an audit is currently underway to improve efficiency and streamline some departments to cut costs. Clearly, the country has been bending over backwards to meet some of the IMF/World Bank prescriptions no matter how painful and unpopular they are.
We are therefore appalled and outraged by the United States government’s bid to influence the Bretton Woods institutions to block any new lending to Zimbabwe until the country met Washington’s preferred conditions. These include restoration of the rule of law, electoral reforms, the reversal of the land reform and security sector reforms.
We reported yesterday how US Senate Committee on Foreign Relations chairman Bob Corker wrote a letter to that country’s secretary for Treasury Jacob Lew on January 28, 2016 urging the US government to use its influence at the Bretton Woods institutions to block any new lending to Zimbabwe. Among other conditions, Corker said any new lending to Zimbabwe should be preceded by what he called clear benchmarks for the restoration of the rule of law, credible process of accountability for missing revenue from diamonds and official acknowledgement of alleged past gross human rights abuses.
We find this totally unacceptable and an attempt at gross interference in the internal politics of our country. The letter is also revealing in that it exposes US control of what are supposed to be international financial institutions and this is regrettable. The US government is showing that it is still in regime change mode and seeks to deny Zimbabwe lines of credit so that the economy collapses and its citizens turn against the government.
US foreign policy towards Zimbabwe is obviously hostile and claims of re-engagement by Washington are mere rhetoric. We abhor the patronising and condescending tone of Corker’s letter and urge the US government to ignore its contents and choose a path of re-engagement with Zimbabwe.
We also call on Washington to lift sanctions on Harare because the punitive measures are retrogressive and impinge on economic development. Zimbabwe deserves a chance to plot its path without undue interference in its internal affairs from meddlesome powers in the West.