3 July 2014

Zimbabwe's Debt U.S.$10 Billion, Chinamasa

ZIMBABWE'S total debt, which is seen as blocking new funding for its stuttering economy, stands at $9,9 billion or 54 percent of gross domestic product after verification with the external debt accounting for 90 percent of the figure, finance minister Patrick Chinamasa said on Thursday.

The domestic debt accounted for $994 million, of which $754 million is owed by the central bank. Government has since assumed the debt and gazetted a Reserve Bank Debt Assumption Bill to clean up the apex bank's balance sheet.

"The outstanding debt, domestic and external as verified is $9,9 billion," Chinamasa told journalists at a press conference in the capital.

"This debt overhang is a very inhibiting factor to securing fresh money, mobilising fresh money, fresh resources. It's a matter that we are seized with to see that its tackled and its going to be a process of course," he said.

Chinamasa said the public and publicly guaranteed external debt was $5 billion or 56 percent of the total debt and $1,35 billion (15 percent) while the RBZ's external debt stood at $596 million or seven percent.

The private sector non-guaranteed external debt is $1,95 billion or 22 percent of the total external debt. Of the amount, the long- to medium-term debt is $1 billion while the short-term figure is $950 million.

"There are no problems in terms of payments of this private sector non-guaranteed external debt. The private firms have been paying and honouring their obligations," he said, adding that the figures had just been included as part of the country's total debt obligation.

Among the creditors are multilateral institutions - AfDB which is owed $597 million with arrears amounting to $519 million, ADF Bank at $58 million (arrears $16 million), Afrexim Bank $20 million, BADEA $20 million, World Bank $833 million (arrears $828 million), IDA $563 (arrears $205 million).

European Development Bank is owed $314 million with arrears amounting to $278 million and IMF $125 million.

Debt overhang very inhibiting ... Samuel Undenge and Patrick Chinamasa on Thursday

Creditors under the Paris Club are owed a total of $3,3 billion. And these are Austria, Belgium, Finland, France, Germany, Italy, Japan, Netherlands, Norway, Spain, Sweden, Switzerland, United Kingdom and United States.

The non-Paris bilateral creditors - China, Kuwait and South Africa are owed $692 million with the largest debt owed to China at $666 million.

Chinamasa said government was engaging its creditors with a view to get alleviation, get more loans and to clear the way to attract Foreign Direct Investment (FDI).

"It's a long road, a very long road - maybe two, three years down the line," he said.

He said government had set out a framework to monitor debt obligations which was approved by cabinet two weeks ago.

"That framework will monitor how we incur debts and for what purpose those debts are incurred," he said, adding that debts towards infrastructural development would be prioritised.

A database had already been set up which would give information on the government's debt, interest rates, the terms of payment and status of payment.

It would also contain information on all borrowings that government guarantees for monitoring purposes as some of them ended up being liabilities, he said.

A statutory instrument to give legal standing to the debt management office would be introduced, and the office will manage all state debts, including those incurred by public state enterprises and local authorities.

"We also feel that the power to borrow should reside in a single authority. We should not have a situation where everybody is signing debt instruments all over and we only get to know about them when they are signed," he said.

Any borrowings by parastatals and local authorities would have to be cleared by the line ministry and the same will apply for private companies that require a government guarantee.


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