Zimbabwe May Clear $1.7 Billion Arrears in 2018, Bank Says

  • Principle of clearing interest, penalties agreed: Noumba Um
  • Process has been ‘painfully slow,’ finance minister says

Zimbabwe may be able to clear $1.7 billion of interest and penalties it owes international financial institutions next year and has made progress in re-engaging them, the World Bank’s country director said.

“The principle of arrears clearance has been agreed” by the World Bank and African Development Bank, Paul Noumba Um said in an interview Wednesday in Harare, the capital. “I don’t think we will be able to have everything closed and settled by the calendar year, but 2018 might be the year we will probably see a better outcome.”

As of October, the southern African nation owed lenders including the International Monetary Fund, World Bank and AFDB about $9 billion, according to the Finance Ministry, and missed a $1.8 billion payment in June last year.

Last month, Finance Minister Patrick Chinamasa said the country had secured a syndicated loan put together by the African Export-Import Bank that will enable it to clear the $1.7 billion of arrears with the two lenders.

Re-engagement would mean Zimbabwe would be entitled to receive financial support from the World Bank again.

‘Painfully Slow’

While “the process has been painfully slow,” Zimbabwe remains committed to re-engagement, Chinamasa told reporters Wednesday.

He has been leading efforts to revive the country’s struggling economy and tap fresh financing from the IMF. The economy has halved in size over the past 16 years, and the population is struggling with a shortage of cash, with banks limiting customer withdrawals.

The nation abandoned its own currency in April 2009 as runaway inflation rendered it worthless, opting instead for a basket of currencies that includes the dollar, South Africa’s rand, the pound and Botswana’s pula.

Zimbabwe’s economy will probably expand 2.8 percent in 2017, the World Bank said. That compares with a previous forecast of 3.8 percent.

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