Zim defies odds, pays US$700m AfDB debt

from The Herald

Herald Reporter

ZIMBABWE last month cleared US$700 million of its US$726,9 million debt to the African Development Bank (AfDB) despite the current economic challenges, the bank has said, while hailing the Government’s commitment to honouring its international financial obligations.

The AfDB also acknowledged that Zimbabwe was under debilitating sanctions, contrary to Western claims that the United States, the European Union and their allies had only placed restrictions on a few individuals and not an economic blockade on the whole country.

A statement on the AfDB’s website said: "On April 14, 2008, the country paid US$500 million to the African Development Bank and US$150 million to the African Development Fund. Zimbabwe has, in all, paid US$700 million to the Bank Group despite numerous economic challenges currently facing the country, both globally and locally."

The bank did not state when the other US$50 million was repaid.

Though the statement did not say how much Zimbabwe owed the bank in total, reliable Ministry of Finance sources in Harare said the total arrears to December 2007 stood at US$726,9 million.

The bank said the country’s economic downturn could be attributed to the imposition of Western sanctions, among other factors, but hailed Government’s resilience and determination to honour its international financial obligations.

"The absence of balance of payments support, declining capital inflows, recurrent droughts and rising oil prices have severely undermined the economy’s productive capacity, resulting in most industries operating below 30 percent capacity.

"Though the country is currently experiencing balance of payments constraints resulting in delays and, sometimes, failure in meeting its financial obligations vis-à-vis donors, the Government, however, fully acknowledges its external financial obligations.

"The Government remains committed to honouring its debt obligations. In line with its commitment to fruitfully engage its partners, goodwill payments are being made with a view to normalising relations and paving the way for new disbursements.

"The Government also remains committed to instituting macro-economic reforms aimed at addressing its economic challenges. It is focused on enhancing food security, foreign exchange generation and increasing the supply of basic commodities," the statement said.

The AfDB commended Government initiatives aimed at ensuring the viability of the productive and service sectors that would lead to the revitalisation of infrastructure, agricultural productivity and increased industrial capacity utilisation.

In this regard, the institution gave the thumbs-up to the agricultural mechanisation programme being steered by the Ministry of Agricultural Engineering, Mechanisation and Irrigation and the Reserve Bank of Zimbabwe.

"The Government, therefore, continues to monitor and develop the sector through the provision of agricultural equipment and implements. To date, the Government has launched three phases of the mechanisation programme with the fourth set to be unveiled in July 2008.

"It is also rehabilitating the country’s irrigation infrastructure with a view to optimising the usage of inland water bodies. It is also contemplating the building of more irrigation schemes in areas that have inland water bodies and reservoirs.

"The Government is also providing concessionary finance schemes geared towards enhancing the production of strategic food crops to guarantee food security.

"In this regard, in collaboration with development partners such as the AfDB that are financing agriculture in the country, the Zimbabwean Government will continue to ensure that the sector regains its status and plays a pivotal role in the country’s economic development," the statement said.