Conrad Mwanawashe Business Reporter—
THE World Bank and donors will next year contribute more than $100 million to the Zimbabwe Reconstruction Fund as the Bretton Woods institute warms up to re-engagement with Zimbabwe following years of acrimony. Six donors, the European Union, United Kingdom, Germany, Norway, Denmark and Sweden and the World Bank State and Peace Building Fund are contributing $44 million to the Zimref currently but the fund is expected to be topped up next year.
Addressing the media yesterday, WB country director for Zimbabwe, Malawi and Zambia Ms Kundhavi Kadiresan said Zimref will expand the bank’s support to include investment projects and to channel some financing directly through Government systems.
Zimref will allow Government flexibility to tackle some of the urgent reform measures in the areas of parastatals reform which will include a comprehensive due diligent audit to cover issues of management systems and capacity and will include turnaround strategies.
“Under Zimref there is going to be $15 million to be made readily available next year. It is giving me the discretion to use the money to carry out these audits. We will start naturally with the strategic ones,” said Minister Chinamasa.
“The audit is not just with respect to parastatals but also with respect to local authorities because between them the State enterprises and the local authorities are a pain and an albatross around the neck of the fiscus,” he said.
Early this month the WB executive board approved the Kariba Dam rehabilitation project financed to the tune of $75 million from the International Development Association and co-financing from the Government of Sweden of $25 million.
In addition, African Development Bank will provide $75 million and the European Union $100 million, for a total project financing of $300 million.
The Zimbabwe Government is also contributing counterpart financing through the Zambezi River Authority.
The project was approved on an exceptional basis that allows World Bank financing to be on-lent by the Zambian government to the Zambezi River Authority and to ultimately benefit Zimbabwe.
The bank is also providing a $6 million grant from Co-operation in International Waters Africa to support preparation of the Batoka Gorge Hydro-Electric Scheme.
Finance and Economic Development Minister Patrick Chinamasa said the Government will, in the next couple of months, start “a conversation” with the WB on Zimbabwe’s arrears to the financial institution.
In this year’s National Budget the Government took an important step to increase its payments to the bank in line with its fiscal capacity and the bank will help to explore options that can accelerate the resolution of this debt overhang while safeguarding efforts to reduce poverty.
“Over the last few months, the World Bank and the Government of Zimbabwe have renewed efforts toward finding a resolution of the outstanding arrears to the bank,” said Ms Kadiresan.
He said Zimbabwe’s arrears have increased to almost close to the principal amount due to interest, penalties and fines.
“The World Bank will also support the Government’s efforts to design a Zim-Asset programme of economic policies and institutional reforms that will boost inclusive growth and accelerate poverty reduction,” she said.