'Zimbabwe's $300m debt hindering loan release'

Published: 14 June 2014

Zimbabwe's $300 million debt to the European Investment Bank is hindering the release of new loans to the country's private sector, a senior EIB official has said.

EIB head of division for Southern Africa and Indian Ocean, Mr Diederick Zambon said he will raise the issue in meetings with the Minister of Finance Patrick Chinamasa and the Governor of the Reserve Bank of Zimbabwe, Dr John Mangudya.

Mr Zambon was scheduled to meet Minister Chinamasa and Dr Mangudya separately yesterday afternoon. He will also meet bankers and private sector players.

He said just like other international financiers, the EIB has the same problems with Zimbabwe with regards to arrears on debt repayments.

"The fact that we have arrears certainly blocks us directly from doing business with any borrower who is in arrears. We are a bank and are prudent," said Mr Zambon.

"We have an AAA rating and we have to continue to have that. It (arrears) is certainly influencing the way we deal with the private sector. But we try to make that influence as minimum as possible," he said.

The arrears to EIB include bilateral loans advanced by European Union member states.

"The arrears influence certainly the way how our authorities will take positions on Zimbabwe in that we work worldwide and we will not treat Zimbabwe in any other way as any other country," said Mr Zambon.

The EIB is cooperating closely with the International Monetary Fund, the World Bank and the African Development Bank and other finance organisations. Zimbabwe is battling an external debt over $7 billion including penalty charges.

The country owes the WB $1,4 billion, AFDB $632 million, EIB $302 million, the IMF $125 million and other multilateral creditors $117 million, figures presented in the 2014 national budget statement by Minister Chinamasa.

Minister Chinamasa has said that the resolution of Zimbabwe's debt overhang is key to normalising relations with the international financial institutions and bilateral creditors.

Minister Chinamasa said the debt overhang has become one of the serious impediments to the country's developmental agenda.

"The continued accumulation of external debt payment arrears is seriously undermining the country's creditworthiness, and severely compromising the country's ability to secure new financing from both bilateral and multilateral sources," said Minister Chinamasa.

Mr Zambon said his mission to exchange views was the first to have a number of official meetings in particular with the Finance Minister and the Governor of the RBZ.
- The Herald