Zim arrears strategy receives French backing as RBZ says Lazard will chip in with funding


Finance Minister Patrick Chinamasa

ZIMBABWE’S debt arrears clearance strategy received the full backing of France when Finance Minister Patrick Chinamasa met his French counterpart during his current tour of Europe.

France is the country’ s second largest bilateral creditor.

French Ambassador to Zimbabwe Laurent Delahouse who was part of the meeting when Chinamasa met France Finance Minister Michel said that his government promised to unlock financial assistance to Zimbabwe as soon it fulfils the first part of its debt clearance strategy, which is the payment of arrears.

“France is the second largest bilateral creditor and will have a significant role to play in Zimbabwe’s re-engagement with both multi-lateral as well as bilateral lenders,” he said.

Zimbabwe’s foreign debt stands at US$10.3 billion, of which US$1.8 billion is arrears to multilateral institutions including International Monetary Fund, World Bank and African Development Bank, while bilateral creditors also include the Paris Club.

This comes at Reserve Bank of Zimbabwe governor John Mangudya told an investment conference in London this morning that arrears clearance was part of the process towards making Zimbabwe a better investment destination.

Mangudya said that to clear the AfDB arrears, funding will be provided from Afreximbank and Standard Chartered plc. The IMF debt would be offset by the SDR holdings while Afreximbank and Lazard Asset managers.

To most of the investors, particular emphasis on the country’s re-engagement process should be placed on progress with land reforms, the reform of State-Owned Enterprises, the transparent application of the indigenisation policy, and building debt management capacity.

Increased transparency is also needed on domestic debt, parastatal financing and mineral resource flows. Furthermore, renewed efforts to contain the wage bill will be required, which currently absorbs over three quarters of revenue and grants. Government is currently in a crisis over the delay in paying civil service salaries. However according to most western investors the reform agenda should rest on the solid grounds of the rule of law and good governance advancement.

Delahouse said Zimbabwe’s efforts for re-engagement were promising as it would open new chapters in the Global economic matrix.

He however, said the process requires painful measures that government should adopt. “Tough measures have to be taken, especially on the wage bill and implementation of sustainable economic policies, “he said.

Delahouse said Chinamasa also met French businesses where many companies expressed interest in investing in the country. He said a French business delegation would soon visit Zimbabwe. –FinX

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