THE World Bank amended its forecast for Zimbabwe’s economic growth prospects for 2017 by 1,5 percentage points to 2,3 percent in its June Global Economic Prospects report released yesterday.
The latest World Bank (WB) projection is still higher than the 1,7 percent projected by Finance Minister Patrick Chinamasa in the 2017 National Budget, on the back of expected positive performances in the mining and agricultural sectors.
At the same time, the WB’s forecast for the country’s economic growth next year is set at 1,8 percent, a -1,6 percent difference from the 3,4 percent it had projected earlier in January.
ZIMBABWE has secured a syndicated loan facility that will enable the country to clear $1.7 billion arrears with the World Bank and African Development Bank.
The loan will allow the country to settle $1.1 billion it owes in interest and penalties and some principal debt to the World Bank and $601 million to the AFDB.
Although Finance and Economic Development, Minister Patrick Chinamasa did not reveal the lenders, Bloomberg quoted him as saying that the rate on the loan was cheaper than that charged by the World Bank.
It is believed the loan could have been put together by the African Export-Import Bank although some suspicion points to Trafigura Group, a Singaporean global commodities firm.
ZIMBABWE expects to secure about $2 billion in external lines of credit from three preferred creditors once Government clears the outstanding arrears to foreign lenders, an official said.
The country has tabled a $1.7 billion debt clearance plan to the World Bank and the Africa Development Bank (AfDB), which has already been approved.
The clearing of the arrears is expected to reduce country risk and open fresh avenues for credit from external private lenders.
Zimbabwe’s three preferred creditors are the African Development Bank (AfDB), World Bank and the International Monetary Fund (IMF). Last October Zimbabwe paid $107,9 million it owed to IMF. The AfDB and World Bank are owed a combined $1,7 billion. A preferred creditor is a creditor receiving a preferential right to payment upon the debtor’s bankruptcy under applicable insolvency laws.
Reserve Bank of Zimbabwe (RBZ) Deputy Governor Dr Khupukile Mlambo said re-engagement with the international financers was crucial in attracting lines of credit and turning the economy around.
ZIMBABWE has met all the conditions precedent to the repayment of debt arrears to the World Bank and the African Development Bank (AfDB), Finance and Economic Development Minister Patrick Chinamasa has said.
In an update on the country’s re-engagement programme with the international finance bodies, he said clearing foreign debt was crucial in addressing country risk and attracting fresh lines of credit to oil economic growth.
The positive development comes after the country successfully settled its $107 million arrears to the International Monetary Fund (IMF) on October 20, 2016. The AfDB and World Bank are both owed a combined $1.7 billion while the country also owes other multilateral institutions, bilateral official lenders and external private creditors.
“The terms and conditions of the facilities that the Reserve Bank of Zimbabwe has put in place to repay the debt arrears to the World Bank and AfDB have been scrutinised and adjudged by the affected International Financial Institutions (IFIs) and found to be reflective of current market conditions with financing terms similar to market transactions recently concluded by several sub-Saharan African countries during 2016 and 2017,” said Minister Chinamasa.
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