GOVERNMENT is exploring a new model for debt clearance that focuses on project-specific strategies, Finance and Investment Promotion Minister Professor Mthuli Ncube has said.
The mooted model seeks to not only alleviate the financial burden posed by arrears, but to also enhance the country's credit profile and attract foreign investment, particularly from key partners like China.
Since the advent of the Second Republic, the Government's approach to economic stabilisation has been closely tied to resolving debt issues, which have been an impediment to sustainable growth.
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The latest discussions, which coincided with President Mnangagwa's recent delegation to China, underscore the urgency of finding a viable solution.
The proposal suggests that income-generating projects, funded by loans, can be utilised to service these debts, thereby creating a direct link between project performance and loan repayment.
This project-specific model reflects a shift in strategy, recognising that many loans have been extended for specific infrastructure and development projects that can generate revenue.
By leveraging the income from these projects, the Government hopes to create a more structured and sustainable approach to debt repayment.
This is particularly relevant for loans sourced from China, where the Government has established a range of initiatives aimed at boosting economic activity through strategic partnerships.
In an exclusive interview with this publication Minister Ncube said the commitment to clear debt arrears is framed within a broader vision for economic recovery and growth.
"As Government, we are committed to clearing all our debt arrears because arrears are an albatross in terms of economic policy making, in terms of attracting investments, in terms of the credit profile and attracting capital," said Minister Ncube.
"So, really, we are looking at all creditors who want to clear arrears.
"Of course, some creditors will ask for special retention given maybe the specificity of the project for example if you look at creditors such as China where resources, loans have been extended for specific projects.
"Projects which generate an income, there is no reason why those projects cannot be used to pay back the loans in the first place.
"So, some of the strategies we are employing now is to see if we can be project specific so as to create the capacity to service the loans and the Chinese loans are a good candidate for that kind of architecture for repayment," said Minister Ncube.
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Moreover, this approach aligns with the Government's ongoing efforts to engage with creditors and discuss tailored repayment strategies that consider the unique aspects of each project.
The willingness to negotiate terms that reflect the specificity of projects demonstrates a proactive stance in managing Zimbabwe's financial obligations, while fostering a culture of accountability.
