Zim signs debt rescheduling agreement

Zim signs debt rescheduling agreement

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ZIMBABWE – The Ministry of Finance and Economic Development has signed a debt rescheduling agreement with the International Fund for Agriculture Development (Ifad) that would see Zimbabwe pay its $22,6 million debt over five years. 

By mid-2015, Zimbabwe owed Ifad $22 683 415.

Speaking at a signing ceremony in Harare yesterday, Finance and Economic Development minister Patrick Chinamasa said the debt has affected Ifad’s co-operation, as the governing laws of the fund do not allow full engagement and allocation of new resources when a member is in arrears.

Chinamasa said government has made a down payment of $2,3 million, 10% of the total debt stock, to clear the arrears meant to unlock new concessional financing, as part of the re-engagement process.

“This we believe has placed us in good standing with Ifad. The rescheduling agreement is in line with the strategy agreed in Lima on the side lines of the 2015 International Monetary Fund/ World Bank annual meetings,” he said.

“This will strengthen the re-engagement efforts by government to unlock concessionary funding from Ifad. In this regard, I am looking forward to the support from the private sector in making this programme a success.”

Chinamasa said Ifad, through a mission to Zimbabwe in October 2015, agreed to a programme framework, whose goals were to contribute to sustainable poverty eradication and improvement in food and nutrition security in semi-arid areas of Zimbabwe.

He said farmers, who will benefit from the programme, will pay for the investment, operation and maintenance costs. The modalities of the payment will be developed during the programme design stage.

Chinamasa said the total cost of the agreed programme was estimated at $60 million over a period of five years. Zimbabwe will get a loan from Ifad of $30 million, a grant from Ifad adaptation for smallholder agriculture programmes ($10 million), Zimbabwe’s contribution in kind through staff and tax exemptions for the programme ($4,9 million) and co-financing by financial institutions amounting to $15,1 million.

Speaking at the event, Ifad director East and Southern Africa, Sana Jatta said Zimbabwe made a good decision to repay its arrears with Ifad in five years instead of the 10 years that the fund was initially willing to accept.

Jatta said Ifad will seek approval of its executive board of the five-year debt resettlement plan, immediately followed by designing a new $50-$60 million small-holder irrigation development project for approval not later than September 2016 with the fund’s financial contribution of around $30 million.

“We all know Zimbabwe requires long term financing to reboot its economy, but is constrained by external debts, which have blocked the flow of international capital into the country. I am here to confirm that as long as the government does not fall again into arrears, Ifad will stay by its side and that of the peoples of Zimbabwe in combatting rural poverty here and abroad,” he said.

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