THE African Development Bank (AfDB) has given Zimbabwe a reprieve by extending a US$500 million facility meant to clear its arrears. The facility is accessed on a first come-first serve basis.
The facility, which would also benefit Somalia and Sudan, is under the bank's arm, African Development Fund (ADF), which provides concessional loans to AfDB's member countries.
ADF deputy governors met in Praia, Cape Verde, from September 12 to 14, where they agreed to extend the facility under ADF-12.
ADF-12 runs from 2011 up to 2013 and has a purse of US$9,3 billion meant for infrastructure, governance, fragile states and regional integration.
"... ADF Deputies extended the US$500 million that had been set aside for countries with outstanding arrears to the Bank. They urged the Bank's management to continue with assistance to the affected countries to enable them to access the debt relief as soon as possible," Ebrima Faal, AfDB's director for the southern region told Standardbusiness last week.
He said the three eligible countries "are all working towards being able to benefit from the facility".
Faal said Zimbabwe had made good progress in trying to clear its arrears with the AfDB, as demonstrated by its adoption and implementation of the Zimbabwe Accelerated Arrears Clearance, Debt and Development Strategy (Zaadds) and the progressive discussions with the IMF.
Zaadds uses a combination of debt relief and resources pledging to clear the country's debt.
"Other major creditors have acknowledged that Zimbabwe has embarked on an appropriate reform path and has made commendable progress with the debt reconciliation and validation exercise, and in improving fiscal management, transparency and accountability in the management of human resources," he said.
ADF resources are replenished every three years by 27 donor countries.
In the replenishment discussions, the donor countries are represented by their ADF Deputies.
Faal said the mid-term review meeting in Cape Verde was meant to be a time for management to update the deputies on performance so far under ADF-12 and to seek guidance for the next replenishment going forward.
Zimbabwe cannot borrow from the multilateral and bilateral institutions due to the country's inability to service the debt.
Zimbabwe has a US$9,1 billion external debt.
Zimbabwe's arrears to AfDB are over US$500 million. This means that the economy cannot access cheap funding for the Tunisia headquartered banking group.
However, private sector companies can access AfDB funds as long as they present bankable projects.
Last year, the AfDB's board of directors approved a US$8 million loan to finance Lake Harvest Aquaculture project on Lake Kariba, the bank's first private sector investment in Zimbabwe after years.