Tuesday, February 8, 2011

Zimbabwe debt arrears hit USD 4.8 billion

PTI 03:02 PM,Feb 07,2011

Harare, Feb 7 (ZIMONLINE) Zimbabwe's foreign debt stood at more than USD 6.9 billion at the end of 2010 while the country has fallen behind on its payments to external creditors to the tune of USD 4.8 billion, according to latest data from the central bank. Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono said the southern African country's total external debt stock amounted to USD 6,929 million as at Dec 31, 2010, representing 103 per cent of GDP. This is way above the international debt sustainability benchmark of 60 percent. "The bulk of the country's external debt is owed to multilateral creditors which account for 36 percent of the country's total debt," Gono said. Bilateral and commercial creditors are owed 33 percent and 31 percent, respectively. Central government was the largest debtor at 57 percent while parastatals and the private sector owed 35 percent and 8 percent, respectively. The ballooning arrears on the external debt have prevented multilateral creditors such as the International Monetary Fund and the World Bank from extending new loans to Zimbabwe, demanding that the country clears the outstanding balances first before becoming eligible for further financial support. Harare owes close to USD 1 billion in arrears to the IMF, World Bank and African Development Bank. Economists and the IMF have contended that the only way Harare could pull itself out of its current debt trap is through international debt forgiveness. An IMF staff paper published last July said Zimbabwe was in debt distress and warned that neither the right economic policies nor its mineral wealth could immediately resolve the country's large debt problem. IMF staff estimate that Zimbabwe's foreign debt is projected to reach 151 per cent of GDP by 2015, with 104 pe rcent of GDP in arrears. To win debt relief Zimbabwe would need to improve ties with the international community and qualify for a global scheme for heavily indebted poor countries that would lead to debt cancellation after a two-year economic programme. Zimbabwe has struggled to win donor support despite the formation of a coalition government last year while private capital inflows have fallen over concerns about a government plan to force foreign-owned firms to sell majority shares to locals. ZIMONLINE

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