Zimbabwe debt arrears hit USD 4.8 billion

Written by: Pti
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Harare, Feb 7 (ZIMONLINE) Zimbabwe''s foreign debt stoodat more than USD 6.9 billion at the end of 2010 while thecountry has fallen behind on its payments to externalcreditors to the tune of USD 4.8 billion, according to latestdata from the central bank.

Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono saidthe southern African country''s total external debt stockamounted to USD 6,929 million as at Dec 31, 2010, representing103 per cent of GDP.

This is way above the international debt sustainabilitybenchmark of 60 percent.

"The bulk of the country''s external debt is owed tomultilateral creditors which account for 36 percent of thecountry''s total debt," Gono said.

Bilateral and commercial creditors are owed 33 percentand 31 percent, respectively.

Central government was the largest debtor at 57 percentwhile parastatals and the private sector owed 35 percent and 8percent, respectively.

The ballooning arrears on the external debt haveprevented multilateral creditors such as the InternationalMonetary Fund and the World Bank from extending new loans toZimbabwe, demanding that the country clears the outstandingbalances first before becoming eligible for further financialsupport.

Harare owes close to USD 1 billion in arrears to the IMF,World Bank and African Development Bank.

Economists and the IMF have contended that the only wayHarare could pull itself out of its current debt trap isthrough international debt forgiveness.

An IMF staff paper published last July said Zimbabwe wasin debt distress and warned that neither the right economicpolicies nor its mineral wealth could immediately resolve thecountry''s large debt problem.

IMF staff estimate that Zimbabwe''s foreign debt isprojected to reach 151 per cent of GDP by 2015, with 104pe rcent of GDP in arrears.

To win debt relief Zimbabwe would need to improve tieswith the international community and qualify for a globalscheme for heavily indebted poor countries that would lead todebt cancellation after a two-year economic programme.

Zimbabwe has struggled to win donor support despite theformation of a coalition government last year while privatecapital inflows have fallen over concerns about a governmentplan to force foreign-owned firms to sell majority shares tolocals. ZIMONLINE

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