Debt resolution critical

Economic analyst Eric Bloch told The Zimbabwean that debt reduction would be critical for the country once a new government was in place. He said it was fortunate that the government had already started re-engagement programmes with the World Bank and the International Monetary Fund.

“Once we have significant debt reduction and clearance of arrears then we can attract meaningful foreign investment – but it will take a long time for us to get there,” Bloch said.

Zimbabwe recently entered into a Staff Monitored Programme with the IMF. The World Bank has also re-engaged Zimbabwe over the resumption of technical and funding support.

Another economist Godfrey Kanyenze said debt reduction was critical and that the current framework for engagement between Zimbabwe and the IMF and the World Bank should continue after the elections.

“Zimbabwe is already in debt distress with an overhang of $10,7 billion of which 70 percent is arrears. Debt resolution is going to be critical for sourcing resources for the future,” Kanyenze said.

Respected economist John Robertson said Zimbabwe also had a responsibility to put in place measures that would qualify for debt relief and forgiveness.

“If you carry on behaving in a manner that will put the country into more debt you don’t qualify. We need to show that our earnings are improving,” he said, adding that Zimbabwe needed to reduce its debt in order to borrow to finance infrastructure that would attract foreign investment.

“In order to build new power stations, buy new aircraft and rehabilitate the railways we need to borrow, we can’t pay cash. We need credit but under the current conditions we don’t qualify for more credit,” Robertson said.

MDC-T and Zanu (PF) have put in their manifestos different economic programmes which they say will restore Zimbabwe’s battered economy. The Minister of Finance Tendai Biti recently announced that the IMF board would allow Zimbabwe to negotiate debt relief and new financing by leveraging its natural resources.

Under the staff-monitored programme, Zimbabwe must provide evidence of sound policies before the IMF can agree to a lending programme.