THE country needs to urgently deal with its external debt which has ballooned to a staggering US$10 billion, Deputy Minister of Finance and Economic Development Samuel Undenge said last week.
Undenge said the arrears were stifling sustainable economic growth and limiting the country's ability to access new financing critical for economic revival.
"Zimbabwe is operating under a difficult environment characterised by sanctions, and an external debt overhang which is estimated to be US$10 billion," he said in Bulawayo at the Confederation of Zimbabwe Industries (CZI) annual congress.
"Zimbabwe's arrears are stifling sustainable economic growth and also limiting the country's ability to access new financing, which is critical to the achievement of inclusive growth, poverty reduction and job creation," said Undenge.
He added the country was failing to access credit from international financial institutions because of the souring debt.
"Because of arrears, the government is blocked from accessing credit at concessional rates. Credit is mainly available as short-term financing and at high interest rates," said Undenge.
"As at December 31 2012, the preliminary figures of the public and publicly guaranteed external debt outstanding [exclusive Reserve Bank and private sector debt] stood at US$6 billion [62% of GDP]. The stock of accumulated arrears accounted for US$4,7 billion [78%] of total debt stock," said the deputy minister.
He added that as at December 31 2012, the public and publicly guaranteed debt outstanding including arrears consisted of US$2,9 billion owed to the Bilateral Paris Club creditors, US$2,5 billion to the multilateral creditors and US$580 million to the Non-Paris Club, which included China.
"Of the total multilateral debt as at December 31 2012, US$1,4 billion [54%] is owed to the World bank, US$632 million to the African Development Bank, US$302 million to the European Investment Bank and US$117 million to other multilateral creditors," said Undenge.
He said the government was engaging multilateral financial institutions such as the International Monetary Fund (IMF), World Bank and the African Development Bank (AfDB) on the resolution of the country's debt.
"The government has held a series of consultations and forums with the world bank, IMF and the AfBD, to build consensus among all stakeholders on the process of resolving Zimbabwe's unsustainable external debt overhang and arrears clearance," said.
He added that Zimbabwe had received commitment from the Development Partners to support and participate in a coordinated and comprehensive process to resolve Zimbabwe's external debt overhang.
"On June 6 2013, Government endorsed a Staff Monitoring Programme [SMP], with the International Monetary Fund, covering the period April to December 2013. The IMF is regarded as the gatekeeper of international finances," he revealed.
The deputy minister said an SMP was an informal agreement between Zimbabwe and the IMF, to monitor the implementation of the country's economic programme.