Zim Seeks Elimation Of All Debt Penalties – Mthuli

Zim Seeks Elimation Of All Debt Penalties – Mthuli
By Ross Moyo

Minister of Finance, Economic Development and Investment Promotion, Professor Mthuli Ncube has requested for the international community who happen to be Zimbabwe’s creditors to eliminate all debt penalties the country faces.

In a recent interview Professor Ncube said, “We are looking for a lot of haircuts … very deep haircuts and elimination of all penalties.”

Zimbabwe’s debt registry, indicates bilateral external debt that stands at US$6.2 billion even though US$4.7 billion of the amount is in arrears, and 76 % of the total bilateral debt.

The Second Republic inherited most of its debt from the late President Robert Gabriel Mugabe’s First Republic which has now culminated to owing US$4.1 billion to Paris Club creditors – an informal grouping of mainly Western creditor nations focused on sustainable debt-relief solutions. Nevertheless most of that debt, amounting 98 % or US$4 billion – has been in default since Zimbabwe fell into financial hardship in the year 2000 almost 24 years ago when Robert Mugabe was at the helm.

During that time, the nation was shut out of international financial markets, including the International Monetary Fund (IMF) and the World Bank, following sanctions imposed on Mugabe’s government by the US and other Western countries, largely in response to violent land grabs and seizures forced on white farmers, the fallout of which is still being felt today.

The country’s biggest five Paris Club creditors are the United States of America, Britain, Japan, Germany, and France accounting for US$3.1 billion which translates to 75 % of the Paris Club debt.

Zimbabwe also owes non-Paris Club creditors, such as China, US$2.1 billion, of which about a third is in arrears.

China it’s so called all weather friend has apparently turned a deaf ear on Zimbabwe’s loan repayment preferring to continue plundering resources in the Southern African nation as it is not in the business of the haircuts’ that Zimbabwe has asked for its debt reduction from creditors.

With Zimbabwe attempting to lift itself out of a punishing debt crisis, it is asking for these “deep haircuts” as Minister Professor Mthuli Ncube cited from its creditors, including China.

Economic commentators however have already prophesied this as wishful thinking on Zimbabwe’s part and a figment of its imagination stating China is “not in the business of haircuts” and is unlikely to accept any reduction of the debt it is owed.

Professor Ncube is seeking help from creditors to address the US$19.2 billion that the country owes, of which US$13 billion is external debt and US$6.2 billion is domestic. Most of the debt as see was accrued during the era of the late former president Robert Mugabe and most has remained unpaid for decades.

“Zimbabwe is currently in debt distress due to the accumulation of external debt payment arrears amounting to US$6.7 billion,” Ncube said.

“The external debt overhang is weighing heavily on the country’s development needs due to lack of access to international financial resources to finance Zimbabwe’s economic recovery and priority projects.”