20 January 2010

Zimbabwe: Economy Projected to Grow 15 Percent

Harare — ZIMBABWE'S economy can grow by a significant 15 percent in 2010 if the country clears its critical international debt and arrears, Finance Minister Tendai Biti has said.

"We are projected to grow by 4 percent to 6 percent in the current state, but without this huge debt we can achieve growth levels of 15 percent.

"We are sitting on huge opportunities (but) only if we manage to resolve our debt overhang," said the minister.

However, economic analyst and political commentator Mr Chris Mutsvangwa said the African Development Bank, which is willing to assist Zimbabwe to clear its foreign debt, should call first for the removal of illegal sanctions imposed on Zimbabwe.

"The biggest drawback on our economy are the sanctions, and AfDB should lead in terms of calling for the removal of these sanctions -- because its shareholders, who are the major drivers of the bank, are the ones who imposed sanctions on Zimbabwe. AfDB should reflect the impact of sanctions, and this noble initiative to help Zimbabwe should come with the blessings of their shareholders, mainly the World Bank support by America and the G8, by removing sanctions," said Mr Mutsvangwa.

The country's external debt currently stands at US$5,7 billion of which US$3,2 billion is owed to the donor community and US$1,3 billion to the International Monetary Fund, World Bank and the AfDB.

Ambassador Mutsvangwa pointed out that companies on the sanctions list are limited in terms of trade and they are failing to access international funding.

Meanwhile, Government has started to engage the international community in a bid to clear the outstanding debts.

AfDB vice president (operations) Mr Aloysius Uche Ordo on Monday said Zimbabwe had made a commitment to pay in full its critical external debt of US$1,3 billion by the end of the year.

He, however, added that the country needed to declare its self a Heavily Indebted Poor Country, among other conditions set by the lenders.

"The key thing is commitment to embark on the path. By end of 2010 or the first quarter of 2011 Zimbabwe should be in a position to clear its debt to the IMF, AfDB and the World Bank.

"Zimbabwe's declaration is a very important part of the process," Mr Ordu said.

AfDB has greed with the Zimbabwe Government on the need to re-engage the international community over the country's funding requirements.

"We have agreed on the path of how to deal with the debt issue the fastest way possible and this can only be done through repayment of urgent debt arrears and this will open the way to the Paris Club," said Mr Ordu.

The HIPC classification would make the country eligible for substantial debt reduction under the Multilateral Debt Relief Initiative.

This approach, however, has generated much criticism from organisations and networks such as the Zimbabwe Coalition on Debt & Development, African Network on Debt & Development.

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