Zimbabwe debt to soar above US$8bn
23 April 2012
The Standard - 22 April 2012
ZIMBABWE’s penalties and arrears to bilateral and multilateral creditors continue to accumulate, with the external debt projected to grow to over US$8 billion by the end of this year, a Cabinet minister has said.
Finance minister Tendai Biti said Zimbabwe was suffering from the lack of economic integration with the rest of the world due to the debt question. “The debt question is the real sanction facing Zimbabwe, the rest is politics,” said Biti.
“Agreements with compound interest on the principal amount were signed (by previous administrations) yet the country operates under Roman Dutch law. Ninety percent of the debt constitutes arrears rather than the core debt.”
Biti said part of the problem was centred on poor negotiation of the agreements. The country owes an invalidated figure of US$9,1 billion to various external financial creditors.
The growth in the external debt position would effectively constitute 118% of the country’s Gross Domestic Product (GDP), a situation Biti described as “unacceptable”....
Debt woes impeding economic recovery
The non-resolution of the debt issue has become a major impediment to the country’s economic recovery and development witnessed by the consummation of the inclusive government in February 2009.
Due to the debt, Zimbabwe has been failing to access concessionary facilities such as the US$15 billion World Bank’s Infrastructure Recovery Asset Platform, the International Monetary Fund (IMF) Balance of Payment support including the US$93,1 million Special Drawing Rights (SDRs) allocated to member countries in 2009.
It has also failed to access the African Development Bank’s (AfDB) Performance Based Allocation to African Development Fund (ADF) for eligible countries since the late 1990s.