Zimbabwe’s enormous foreign debt is hampering efforts to mend the economy, Finance Minister Tendai Biti said on Monday, urging the government urgently to resolve the debt crisis.
“Zimbabwe is suffering as a result of its debt overhead,” Biti told journalists after meeting with representatives of the African Development Bank.
“We have to resolve our debt crisis as a matter of urgency.”
Zimbabwe owes $5,4-billion to multilateral donor agencies, an amount slightly large than the size of the national economy last year.
“Without the debt overhead, we can grow [the economy] by up to 15%,” Biti said. “We hope the government of Zimbabwe will take a bold decision and do what is best for the economy.”
African Development Bank vice-president for operations, Aloysius Uche Ordu, commended efforts by the government to revive the economy.
“On the economic side, progress has been made,” Ordu said. “We believe this progress on the economic front will help.”
He said Zimbabwe had asked the ADB to “help in its process of re-engaging multilateral finance institutions.”
“Arrears clearance is so important because it’s the only way to re-engage the multilateral finance institutions.”
A government report said various options were being considered for paying off the external debt, including asking for debt cancellation in a move to secure new financing from lenders.
Biti said the country will need $45-billion to restore its economic performance to levels seen in 1996.
President Robert Mugabe, who has ruled since independence in 1980, was forced into a power-sharing arrangement with Prime Minister Morgan Tsvangirai following disputed elections in 2008.
The deal remains shaky due to disagreements over the allocation of key jobs, but the new government has stopped Zimbabwe’s economic freefall. – AFP