Golden Sibanda Senior Business Reporter
THE Bankers Association of Zimbabwe has commended Government’s effort to clear Zimbabwe’s $1,8 billion arrears with global lenders, but cautioned this has to be supported by strong economic reform programmes anchored on Zim-Asset and the 10-Point Plan. BAZ said clearing arrears provides Zimbabwe with a unique opportunity to comprehensively address barriers to balance of payments support and medium to long-term financing required for recovery of productive and infrastructural sectors of the economy.
The benefits accruing to Zimbabwe include reduced risk premium, following arrears clearance, implying access to comparatively cheaper international and regional lines of credit, with the overall effect of lowering the cost of money in the country, BAZ said. BAZ president Mr Sam Malaba said, additionally, the attendant lower country risk profile; invariably increases the attractiveness of Zimbabwe to foreign direct investment as well as domestic investment, with multiplier growth effects on the economy.
“Going forward, beyond clearing the arrears, to the Multilateral Financial Institutions of $1,8 billion, much work still lies ahead, including re-engagement of the Paris Club for the bilateral debt negotiations and the London Club for commercial debt resolution.
“The engagement with the MFIs must be supported with a strong economic reform programme, which is anchored on both (medium-term economic policy) Zim-Asset and the 10-Point Plan as enunciated by His Excellency, the President,” Mr Malaba said.
Government is already working with IMF on the country’s economic policy reform agenda and to gather support towards a strategy for clearing the outstanding arrears to global lenders: balancing the primary fiscal budget; restoring confidence in the economy and stabilising Zimbabwe’s financial sector; addressing the country’s debt challenge; and enhancing the business environment with a view to attracting investments.
Zim-Asset is Government’s foremost medium-term economic blueprint crafted to guide economic planning from 2014 /18. It is a cluster-based plan, reflecting the strong need to fully exploit the internal relationships and linkages that exist between various facets of the economy. The clusters are food security and nutrition; social services and poverty eradication; infrastructure and utilities; and value addition and beneficiation.
The 10-Point Plan was crafted by Government, and announced by President Mugabe when he presented his State of the Nation Address in August, to maintain economic growth. The plan designed to sustain economic growth and create jobs, cuts across sectors and aims to revitalise agriculture, agro-processing value chains, advance beneficiation and value addition to agricultural produce and Zimbabwe’s abundant minerals.
President Mugabe said the plan is also focused on key infrastructure such as water, energy, transport and ICTs, unlocking potential of small enterprises, driving private sector investment, restoration and building confidence in the banking sector, among other priorities. BAZ’s remarks relate to a trip by a Government delegation, led by Minister of Finance Patrick Chinamasa and Reserve Bank of Zimbabwe governor, Dr John Mangudya.
The meeting in Peru culminated in successful consultations with multilateral and bilateral creditors early this month at the International Monetary Fund and World Bank Annual meetings in Lima, Peru, where the external payment arrears strategy was well received and supported with Zimbabwe committing to clear them by April 2016.
In order to strengthen recovery fundamentals, sustain economic growth and reduce poverty and sustain national development, Mr Malaba said it is imperative that, the Government implements a strong internally driven macro-economic reform programme.