“All of us are concerned about Zimbabwe” – says South Africa’s finance minister

By Business Day (SA)

CAIRO: Finance minister Enoch Godongwana says the government supports Zimbabwe’s implementation of key reforms to resolve its debt problems and end 21 years of sanction.

If successful, such moves can boost economic integration and prosperity for the entire Southern African Development Region.

Gondongwana, who presented a message of support during a round-table on Zimbabwe’s debt arrears clearance at the African Development Bank (AfDB)’s 2023 annual meetings on Wednesday, said any challenge faced by Zimbabwe will have spillover effects into the SA economy and a resolution of its debt crisis is a resolution to SA’s problems.

SA’s Enoch Godongwana (right) with Mthuli Ncube and President Emmerson Mnangagwa in Egypt

“All of us are concerned about Zimbabwe. Economic sanctions continue to place Zimbabwe further into unsustainable debt,” Godongwana said. “We support this [debt reforms] initiative with all our effort.”

Zimbabwe’s long outstanding debt arrears continue to be a major impediment to its socioeconomic development. The country, together with the AfDB and other development partners are working on a process to clear its debts and arrears.

Speaking at the round-table, Zimbabwe President Emmerson Mnangagwa said his government started a programme in December 2022 to reassure development partners and creditors that the Zimbabwe government is committed to the implementation of key reforms critical to resolving the country’s nearly $8.3bn of debts and arrears. Of the $5.7bn of bilateral debt, 69% of this is accounted for by arrears. Similarly, of the $2.6bn of multilateral debt, 91% is accounted for by arrears.

The second high-level meeting was held in February.

Mnangagwa said that to show commitment his government established a Structured Dialogue Platform with all creditors and development partners to institutionalise structured dialogue on economic and governance reforms to underpin the arrears clearance and debt resolution process.

“In spite of the challenges associated with the debt overhang and further exacerbated by the albatross of the illegal economic sanctions, Zimbabwe is realising key milestones towards moving our country forward for the good of our people,” said Mnangagwa.

AfDB president Akinwumi Adesina, who is the official champion for Zimbabwe’s arrears clearance and debt resolution, said since then, two other high-level dialogues have been held on Zimbabwe’s plans to clear its arrears and resolve debt obligations to creditors.

“The issues are not just economic or financial. They also involve governance, rule of law, human rights, freedom of speech, political level playing field, electoral reforms that will assure free and fair elections — as well as fairness, equity and justice for the commercial farmers and other businesses who were dispossessed of their lands, for which there is a clear need for restitution and compensation,” said Adesin.

He said over the past 18 months, “we have institutionalised a platform for regular, constructive, and open dialogue that is key for trust and confidence building among all stakeholders”.

Zimbabwe finance minister Mthuli Ncube, who presented at the round-table discussions, said the successful implementation of this programme will also include improving the overall business environment to attract greater private investments.

Ncube told delegates that working groups on economic, governance, land tenure reforms — compensation under the Global Compensation Deed and the Bilateral Investment Promotion and Protection Agreements — have comprehensively discussed these issues over the past four high-level dialogues.

He said there is also a strong and measurable commitment by the government to economic and fiscal policy reforms.

“The IMF Article IV mission in December 2022 was successful and was approved by the board of the IMF,” Ncube said.

He said the Zimbabwe government has also taken the decision to eliminate multiple exchange rates, introduce an enhanced foreign exchange auction market, transfer outstanding debt of the Reserve Bank of Zimbabwe to the Treasury for greater transparency and avoiding off-budget financing, “and end the quasi-fiscal activities of the Reserve Bank of Zimbabwe”.

Ncube said the government has also taken decisions to end subsidies and reform state-owned enterprises.

“Also, the establishment of the liquidity management committee is a proactive measure that will promote effective co-ordination between fiscal and monetary policies,” Ncube said.

Zimbabwe also decided to make land titles available to enhance the security of commercial farmland, and these would be for 99-year leases which are also commercially viable, bankable, and transferable, he said.

Adesina told delegates that Zimbabwe’s decision to go on an IMF Staff Monitored Program was excellent and reassuring to creditors, development partners, and multilateral and bilateral financial institutions, and that it will ensure that the reforms committed to are implemented.

“We [the AfDB) are currently working with the Zimbabwe to develop innovative financial instruments and structures that can be used to front-load the mobilisation of the $3.5bn for compensations.”