/ 12 May 2008

Zim pays back $650 000 to ADB

Zimbabwe has paid back $650 000 in arrears to the African Development Bank (ADB), despite vast economic problems at home, as part of efforts to meet commitments to donors, the bank said on Monday.

”Zimbabwe has in all paid $650 000 to the bank group despite numerous economic challenges currently facing the country, both globally and locally,” the bank said in a statement issued in Mozambique ahead of the ADB’s annual meeting.

An earlier ADB statement released to reporters and published on the bank’s website said Zimbabwe had repaid $700-million. A bank official, who declined to be named, told reporters in Maputo that the initial statement was incorrect, without giving further details.

It said Zimbabwe had managed the repayment on April 14 despite an absence of balance of payments support, declining capital inflows, recurrent droughts and rising oil prices, which had severely undermined productivity and led most industries to operate below 30% capacity.

It also pointed to Zimbabwe’s hyperinflation — currently the world’s highest at 165 000% — rising interest rates and a surge in food prices.

Zimbabwe faces sanctions from the United States and Europe and has been cut off from fresh funding from the ADB and other multilateral lenders.

”The country has been in arrears with the bank group and a recent effort to pay part of these arrears is a testimony of the government determination to live up to its international financial obligations vis-à-vis donor agencies and development partners,” the ADB said.

It did not specify the total amount Zimbabwe owes.

The World Bank, which recently tied aid to a policy shift in the Southern African nation, said Zimbabwe’s arrears to the World Bank, International Monetary Fund and the African Development Bank stood at $1,1-billion.

Zimbabwe, which once boasted strong agricultural and manufacturing sectors, has descended into economic chaos over the past decade, weighing on regional development. The country faces chronic shortages of food, water and fuel and has an unemployment rate of 80%.

A disputed March 29 election has undermined hopes that the country might soon be on the road to recovery.

ADB President Donald Kaberuka told Reuters in an interview last month that the bank stood ready to help Zimbabwe once sanctions are lifted, saying in such circumstances the whole international community should be prepared to move in to help stabilise the economy. — Reuters