Zimbabwe seeks to restore donor relations to obtain loans

Zimbabwe plans to catch up on overdue debt payments by June so that it can obtain financial support from the European Union after the vice president met with EU officials.

“We are engaging with the EU, and last week Vice President Emmerson Mnangagwa met their country representative here, as part of that re-engagement process,” Finance Minister Patrick Chinamasa said in an interview Tuesday, declining to provide more details. “We believe that by June this year, we will have fulfilled our obligations and hopefully be eligible for fresh funding.”

The sub-Saharan African nation has struggled to access finance to support its ailing economy since it fell into default to the International Monetary Fund in 1999. Governments, including the U.S. and EU, imposed sanctions on President Robert Mugabe and senior members of his Zimbabwe African National Union-Patriotic Front party, citing allegations of human rights abuses and electoral fraud.

The country has agreed to pay international lenders such as the IMF, World Bank and African Development Bank about $1.8 billion. Chinamasa wants the IMF to resume lending to the economically troubled nation this year.

Debt Arrears

“When we clear these arrears, we’re expecting a corresponding commitment,” Chinamasa said Wednesday in a briefing to business leaders and the World Bank, which agreed to lend Zimbabwe $32 million to fund water and sanitation projects. “Our problem is access to capital, affordable capital,” he said.

Zimbabwe owes multilateral banks about $7.1 billion, or 51 percent of gross domestic product, according to a World Bank report released Wednesday. Total debts amount to about $10 billion, said Chinamasa.

The country is appealing for foreign assistance to help stave off a drought-induced food crisis that may compel the government to declare a national emergency, Mnangagwa, the deputy president, said on Wednesday in Parliament.

“The matter is being discussed in cabinet and it’s just a matter of time before we approach the United Nations and other organizations for help,” Mnangagwa said.

 – Bloomberg