Zim's arrears with World Bank Soar to US$807m

The World Bank is among the major international money lenders to the cash-strapped government.

Tendai Biti
Tendai Biti

The other lenders are the International Monetary Fund (IMF), the African Development Bank (AfDB), and the Paris Club.

"Zimbabwe is in arrears to both the International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA) to the tune of US$807 million," Biti said.

"Before the World Bank can resume regular assistance to Zimbabwe, the country's arrears need to be cleared in full. This involves two general approaches, which both require formal approval by the World Bank Executive Board."

He said firstly, IDA could utilise Zimbabwe's regular allocation to clear World Bank Group arrears.

"However, Zimbabwe's regular allocation under the above window can only cover a small portion of about 15 percent of its total IBRD and IDA arrears," Biti said.

He said secondly, the World Bank could provide an exceptional Arrears Clearance Grant under which a bridging loan was provided by development partners and repaid with the proceeds of IDA Development Policy Cooperation.

"This is the most ideal strategy for Zimbabwe given the size of its arrears," Minister Biti said in Harare.

"In addition, the country meets the criteria to be considered under the exceptional arrears clearance mechanisms for IDA only countries, given its Gross National Income (GNI) per capita of US$340, which is far below the IDA cut off of US$1 095 as at end of 2008."

Biti said already, under the 15th IDA Replenishment, shareholders agreed to earmark resources to finance arrears clearance operations for eligible countries, which include Zimbabwe.

"Eligibility for such exceptional allocations is ring fenced to countries with arrears, as at December 31, 2006," Biti said.

Post published in: Business

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