eBusiness Weekly
Africa Moyo
Britain is excited to see Zimbabwe achieve middle-income economy status by 2030 and is keen to assist the nation implement its socio-economic and political reforms, outgoing United Kingdom Ambassador to Zimbabwe, Catriona Laing has said.
Ambassador Laing said the reforms are central to achieving the envisaged “Vision 2030”, under which Government wants to ensure all active citizens access “decent jobs” and a per capita income approaching $5 000 dollars per person. Critically, the UK plans to support Zimbabwe when it goes to this year’s annual International Monetary Fund and World Bank Group meetings scheduled for Bali Nusa Dua, Indonesia.
Zimbabwe is expected to meet its creditors in Bali, and present on its arrears clearance strategy. The annual meetings are scheduled for October 12 to 14.
Ambassador Laing said: “We want Zimbabwe to succeed. You have enormous potential and nothing will make us happier than to see that aspiration of a middle-income economy by 2030 being achieved.”
Finance and Economic Development Minister Professor Mthuli Ncube, believes “Vision 2030” is “absolutely” achievable if “we all put our hands on deck”.
However, Prof Ncube says achieving a middle-income economy by 2030 requires that the country undertakes critical reforms including fiscal consolidation and arrears clearance.
Zimbabwe is weighed down by arrears, which are upwards of $1,8 billion owed to the World Bank, the AfDB and IMF.
At the spring meetings of the World Bank and IMF in 2015 in Lima, Peru, local monetary authorities presented an arrears clearance plan dubbed the Lima Plan.
Under the Lima Plan, Zimbabwe has only settled IMF’s arrears of $108 million.
Failure to settle the obligations with the Bretton-Woods financial institutions has the financiers slamming the door on new loans, complicating the country’s economic revival programme due to shortages of foreign currency for retooling and importation of raw materials.
Harare owes both the AfDB and World Bank a combined $2,5 billion, with indications being that 75 percent of it is in arrears. Bilateral institutions are also owed in excess of $3,2 billion, with 80 percent of that due to France, Germany, United States of America, Japan and the UK.
U K to fight in Zim’s corner at Bali
During a Press conference in Harare on Tuesday, Ambassador Laing said the annual IMF and World Bank meetings in Bali present Harare with a great opportunity to engage creditors and indicate its plans to settle its obligations.
“(The creditors will be) very interested to hear what you say and to see what the timelines are going to be, because I think the sooner we can get on track to deal with these challenging reforms, the better.
“But we recognise that you will need support and we are here to provide that support to try and encourage a process back of getting to IMF programmes, perhaps on interim Staff Monitoring Programme (SMP) as soon as possible and enable you to start a serious dialogue around the clearance of the arrears to the IMF, World Bank and to the AfDB, which will hopefully then unlock what you really need, which is lines of credit from the private sector and FDI,” said Ambassador Laing.
As Zimbabwe readies for Bali, authorities are considering a number of options to honour its arrears. Prof Ncube said the Heavily Indebted Poor Country (HIPC) route would be considered while a “more commercial route” will be a last resort.
HIPC, a group of 36 developing countries with high levels of poverty and debt overhang that are eligible for special assistance from the IMF and the World Bank.
A combined debt of $99 billion has been rescheduled for the identified countries.
IMF and the World Bank initiated HIPC in 1996 after massive lobbying by Non-Governmental Organisations and other institutions that sought debt and low interest loans to cancel, defer or reduce external debt repayments to sustainable levels. By January 2012, 39 countries had been identified by the HIPC initiative to get debt relief, with 33 of them in Sub-Saharan Africa including Zambia, Malawi, Ghana, DRC, Cameroon and Madagascar.
In 2009, Zimbabwe considered pursuing the HIPC route but some Government officials felt the move was “insulting” as the country is endowed with massive mineral deposits and therefore, “too rich to be poor”.
An IMF senior official Domenico Fanizza, rubbed salt to injury in 2014 when he declared that Zimbabwe is not poor as it has a “lot of potential”.
“It (Zimbabwe) is not even poor; it is merely a policy and management issue. Zimbabwe owes IMF $142 million and cannot benefit from the institution’s financial support because of these arrears. The country does not qualify for debt relief under HIPC arrangement,” said Fanizza.
Prof Ncube says no single arrears clearance strategy has been decided on but when that happens, creditors would be engaged to establish if they subscribe to the plan.
Zim lauds U K support
Prof Ncube says the UK has been Zimbabwe’s “strong partner” for some time and regards the arrears clearance agenda.
He said the UK has often been supporting Harare in getting the “right partners” through arranging critical international meetings. With Bali on the horizon, Prof Ncube is counting on the UK’s support again.
“We will be going to Bali for the World Bank meetings and again, further conversation around the arrears clearance issue of which, again, I thank (the) UK for being a key partner in moving that process along.
“So I wanted to thank Ambassador Laing for being a wonderful supporter for Zimbabwe.”
The UK has been a long-term partner for the country, having extended resources to the tune of 1 billion Pounds to support various sectors such as education, health and the Zimbabwe Reconstruction Fund (Zimref). This is in addition to support extended to arrears including technical co-operation.
Ambassador Laing, who will be leaving his post in Zimbabwe at the end of year, says the UK is excited that Zimbabwe is willing to re-join the Commonwealth.
She will be replaced by World Bank executive director Ms Melanie Robinson who will take up her appointment in January next year. Ambassador Laing will go to Nigeria to become British High Commissioner there.
