February 04 2010

Zimbabwean Prime Minister Morgan Tsvangirai said on Thursday political divisions should not hamper efforts by the inclusive government to craft a holistic and sustainable debt strategy for the country.

Tsvangirai made the remarks while opening a one-day workshop convened to discuss solutions for the country’s 5.7 billion U. S. dollar external debt.

The premier, who entered into a power sharing government with President Robert Mugabe and Deputy Prime Minister Arthur Mutambara last February, said the cabinet had not agreed on the best strategy to resolve the debt.

He said there were some in the cabinet who were of the view that the cause of the debt should be analyzed first before solutions could be proffered, while others believed the country was too rich to be declared poor in order to qualify for debt forgiveness under the Highly Indebted Poor Countries (HIPC) initiative.

“The debate of debt strategy in cabinet was a bit overheated,” Tsvangirai said. “But as government we take responsibility for the debt and we hope political divisions will not influence this debate.”

Out of the 5.7 billion dollars Zimbabwe owes to external creditors, 3.65 billion dollars is in arrears.

The country owes the World Bank 600 million dollars, 140 million dollars to the International Monetary Fund (IMF) and 400 million dollars to the African Development Bank (AfDB). At least 1. 6 billion dollars is owed to bilateral creditors.

Finance Minister Tendai Biti said Zimbabwe’s external debt was much higher than 5.7 billion dollars because the debt it owes in respect of the land reform program has not been validated.

He estimated the government’s compensation for land held by foreign governments that was repossessed during the land reform program to run into billions of dollars.

The minister, who spoke in favor of the HIPC status for Zimbabwe, said the country needs to come up with a debt clearance strategy that allows its economy to develop.

“We cannot pay the debt for the sake of just paying it,” Biti said. “Let us pay it when the repayment is in consideration of a strategy that will help us to develop our economy. The repayment must be a strategy of development, of reengagement and transition. The strategy must allow us to kill 20 birds with one stone.”

He dismissed the criticism of his proposal for HIPC status for Zimbabwe in some quarters, saying the disapproval was unfortunate.

He described as myths arguments by those opposed to HIPC that it would be used by the country’s detractors as a tool to effect regime change in the country.

Biti said Zimbabwe could not run away from the reality that it was poor, adding the option of resource pledging to offset the country’s debt was also not feasible because the country’s mineral resource base was not well documented.

He noted that the debt overhang was affecting the country’s ability to access external funds to rebuild its economy.

Government ministers, members from the civil society, the academia and representatives of the IMF, World Bank, AfDB and other African countries that have gone through the HIPC initiative are attending the workshop.

An inter-ministerial team chaired by Mutambara has been tasked to draw up the national debt framework by Feb. 23.

Source: Xinhua