17 June 2019

Zimbabwe: AfDB Plans Zim Financial Package

The African Development Bank (AfDB) is working on a financial package for the country, as the continental bank continues to be impressed by political and economic reforms being implemented by Harare.

In an interview on the sidelines of the 54th Meeting of Boards of Governors of the AfDB and the 45th Annual Meeting of the African Development Fund (ADF), which ended last week, AfDB director for the Southern African region Dr Kapil Kapoor confirmed that a package was being crafted.

"We are in the process of having discussions with the African Development Fund donors on what are the size (of funding) the AfDB would disburse; what are the conditions of the entire programme?" said Dr Kapoor.

"Once those numbers appear by December this year, then we start seeing what sort of finance to fund from the system."

The move by the AfDB comes immediately after the bank approved the Zimbabwe Country Brief, in an overwhelming endorsement of the country's reforms under the Transitional Stabilisation Programme (TSP).

Dr Kapoor said he met Finance and Economic Development Minister Professor Mthuli Ncube during the Bank's meetings here and told him the AfDB was happy with the reforms.

He said the board would be providing resources for disasters such as Cyclone Idai and some relief projects.

"The reason our board was encouraged to do that was because of the agreement with the IMF (International Monetary Fund) on the programme and some of the laws the country is in the process of changing," said Dr Kapoor.

"We believe there is a lot of momentum taking place (and) as long as that happens, we will continue supporting; we will be able to continue supporting it.

"There is an agricultural programme that will be probably ready around October of this year, as you know this is the end of ADF cycle; so we are drawing down on the AfDB resources and it's limited."

Dr Kapoor said as part of the reforms underway in the country, the Staff Monitored Programme (SMP) being implemented under the watchful eye of the IMF was "a very good step", adding that the next step was to ensure "Government delivers on its commitments".

"Government has to commit to all these laws that they are changing," he said. "Once this track record of reforms is established, this will then allow for further funding. What is important now is to maintain that reform momentum.

"Once that confidence is there, then we will go to the next step."

It is also expected that at least three major projects funded by the AfDB would be launched in the country by October this year.

Government is also confident that it could start drawing funds under the ZimFund starting January or February next year.

An arrears clearance plan is central to more funds coming from the AfDB.

Zimbabwe owes the AfDB US$605 million.

Meanwhile, the AfDB said Zimbabwe's economy expanded by an unprecedented 3,5 percent last year, driven by agriculture together with a peaceful election despite cash shortages and the three-tier pricing system.

The AfDB also says the growth came despite foreign currency shortages

The bank projects a 4,2 percent economic growth this year and 4,4 percent next year.

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