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Bank seeks alternatives for debt relief

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THE African Development Bank is undertaking a major study which aims to propose options to debt relief and arrears clearance, in case Zimbabwe is not eligible for Heavily Indebted Poor Countries debt relief, a senior official has said. In an interview with The Herald Business, AFDB resident representative, Mr Mateus Magala said the study is part of the bank’s contribution to Zimbabwe’s re-engagement drive.

The AFDB in 2012 hosted the first Zimbabwe High-Level Debt Forum in Tunis that was aimed at deepening the process for Zimbabwe’s re-engagement.

The bank also co-hosted a series of re-engagement forums, both in Washington DC and Tokyo.
“Consequently, there has been strong support from the development partners for moving forward Zimbabwe’s arrears clearance and debt relief process as well as giving impetus to the overall re-engagement,” said Mr Magala.

“More recently, both the Government and Development Partners are again asking the Bank to host a second round of Zimbabwe High-Level Debt Forum this year.

“The forum is expected to act as a catalyst in resolving the country’s debt overhang and thereby laying the foundation for the socio-economic transformation of Zimbabwe, focusing on inclusive growth and creation of sustained jobs,” he said.

According to the Ministry of Finance and Economic Development, Zimbabwe’s external debt stood at $6,4 billion last year with over $5 billion of that amount in arrears.

AFDB has taken leadership in the process of Zimbabwe’s re-engagement and normalisation of relations with the international financial community by promoting dialogue and mobilising external creditors, to garner support for the country on financing in general and debt relief, in particular.
The bank, which commenced operations in Zimbabwe in 1982, as at June 2014, has funded 40 operations of which 12 are active.

Total bank cumulative commitment is estimated at $810 million, composed of loans (73 percent), grants (21,7 percent) and lines of credit (5,3 percent).

The total commitments cover the following sectors: Multi-Sector (28,9 percent), Infrastructure (27,6 percent), Industry/Mining/Quarrying (18,3 percent), Water Supply & Sanitation (13,6 percent), Financial Sector (5,3 percent), Agriculture Sector (4,8 percent), and Social Sector (1,5 percent).

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