eBusiness Weekly
New funding on cards
World Bank team expected
Zimbabwe ready to clear arrears
Happiness’ Zengeni In Davos, Switzerland
Zimbabwe is on the verge of breakthrough to start receiving concessionary funding support from the World Bank for the first time in nearly two decades after the Bretton Woods institution agreed to engage the country on a roadmap for arrears clearance.
This comes as it emerged that the World Bank had been refusing Zimbabwe the opportunity to clear its arrears to the multi-lateral lender despite the global standing policy of not extending support to countries with outstanding dues to the institution.
Sources close to the developments told Business Weekly that an immediate tailor-made funding package could be worked out in “just three months” and the sooner Zimbabwe cleared its arrears, the sooner the country would be able to access the much needed long term finance.
The World Bank stopped extending concessionary loans to Zimbabwe in 2001 after it defaulted.
Zimbabwe owes the multi-lateral financial institutions about $1,8 billion (the World Bank $1,15 billion and the African Development Bank $601 million). Recently, the country cleared its $108 million arrears to the International Monetary Fund. Finance and Economic Planning Minister Patrick Chinamasa said the Government had already mobilised resources to clear the arrears and unlock fresh funding from the bank.
Minister Chinamasa said Zimbabwe would soon host a high powered delegation from the World Bank to conduct a needs assessment exercise for the country after President Mnangagwa yesterday vowed to clear arrears with the multilateral institution.
“We agreed that we will undertake a needs assessment of our country and set out the priorities, and this is the report we can then take to the World Bank; have it coasted, and then submit it to them so that soon after clearance of arrears we are able to access funding, concessionary funding,” Minister Chinamasa told Business Weekly soon after President Mnangagwa concluded his meeting with World Bank chief executive officer Kristalina Georgieva at the ongoing World Economic annual meetings in Davos.
“We have agreed that the World Bank is going to send a mission to conclude discussions on our needs assessment for post arrears clearance resource mobilization and support.”
Without giving specific information on the source of funding and strategy used, Minister Chinamasa said Zimbabwe had already mobilised resources to clear the country’s arrears.
“What I can say is that we have mobilized the resources to pay to the World Bank, but what the conversation between us and the World Bank is to say, when we make good on our payment what resources can we expect from the World Bank,” said the minister.
Minister Chinamasa said the team would identify priority projects that are long and short term.
He said Zimbabwe wanted a holistic approach, which involved a needs assessment, arrears clearance and access to fresh funding.
“So it’s very difficult always to put a time frame, because when you are dealing with institutions it is not always easy to be definitive about timeframes,” the Minister said.
President Mnangagwa also met African Development Bank (AfDB) president Dr Akinumwi Adesina on the sidelines of the Davos meeting. Dr Adesina said he had discussed a number of subjects with President Mnangagwa including the arrears clearance, although he could not be drawn into revealing further detail on the matter.
“We discussed so many things with the President and I am sure that with his dynamism, focus, passion and commitment that I saw plus the fact that we also had the Minister of Finance and Reserve Bank Governor (Dr John Mangudya), we will be faster than anybody ever imagined,” Dr Adesina said. Dr Adesina commended President Mnangagwa for a pro-reform, pro-economy agenda and pledged the ADB’s unwavering support.
Minister Chinamasa said the Government would guarantee investors a viable investment environment with incentives being extended to attract foreign direct investment.
“We are saying those guarantees will come easy once we have a growing economy. Essentially what we are saying is come and invest, we will give you fiscal incentives, we come and locate in our special economic zones where we are granting you fiscal incentives, and as the economy grows we should overcome the current challenges that we have in respect to foreign currency shortages, and we are confident ourselves that we are on the right trajectory in terms of our economic growth,” Minister Chinamasa said.
Since taking over in November last year President Mnangagwa emphasized the need to reengage the international community, following years of isolation, which would see it reestablish relations with global lenders and start attracting meaningful foreign investment.
