Zimbabwe obtains $1.2 billion funding to repay its world bank arrears

Zimbabwe has secured a $1.2 billion funding from an undisclosed source to clear its world bank arrears.

According to the World Bank and African Development Bank (AfDB) Minister, Patrick Chinamsa ” all I can say is that we have succeeded in mobilizing a commercial loan which is cheaper than what the World Bank is now charging us, and when we know what new money the World Bank would give us then we should be able to complete the transaction. We cannot pay $1.2 billion without the expectation of new money and I am happy to say that they are coming our way in terms of understanding.”

As at October 2017, Zimbabwe owed World Bank and AfDB about $9 billion and other international financial institutions $1.7 billion.

Despite the Southern African country’s settled debt of $108 million to IMF, fresh funding has been difficult to come by as the international lending institutions operate a pari-passu rule that states that all credit should be paid at the same pace without bias.

Chinamsa noted that “we cleared our arrears with the IMF and the rule is, we must address our indebtedness first to other multilateral institutions.”

Adding to it, the Governor of Reserve Bank of Zimbabwe, John Mangudya said ” the purpose of paying arrears is to unlock new capital. Our motivation for wanting to pay arrears is to unlock capital from these two institutions and we need to know what they are giving  us as fresh funding.”

With the loan repayment, a re-engagement can be agreed upon as Zimbabwe would be entitled to receive another financial support from the World Bank.