Harare: Zimbabwe's US$7 billion external debt will this week come to the fore when a visiting International Monetary Fund (IMF) team meets treasury and central bank officials in the capital, a top government official has said. The IMF mission will be on routine Article IV consultations that appraise economic policy issues between the multilateral institution and government.
Finance minister Tendai Biti this week told delegates attending the Zimbabwe Investment Conference organised by United Kingdom-based Euromoney Conferences that Zimbabwe, currently saddled with a ballooning debt, has to tackle its dues before sustainable economic growth could be realised.
The Finance minister sees the economy growing by 9,3% this year, buoyed by anticipated resurgence in mining and agriculture. Biti further said he had undertaken to treble income per capita to US$1 200 within the next three years.
But experts say the country's run-down infrastructure, which was established from funds mainly sourced from the BrettonWoods institutions, would slow down economic recovery.
Zimbabwe's current external debt, owed to multilateral financiers, both the Paris Club and non Paris Club members, represents 103% of the country's gross domestic product.
"An IMF team on Article IV consultations meetings will be in the country on March 16 and key discussions will be on debt," Biti said.
"If someone were to ask me what are the two urgent things that Zimbabwe has to deal with - I would put the issue of debt and the resolution of our own political difficulties at the epicenter," he added.
He said Zimbabwe had since 1997 "lost a decade" after it failed to access development funds from multilateral financiers due to arrears.
He said government would push for reforms that would restore Zimbabwe's eligibility to access development funds from the traditional creditors.
The World Bank, according to Biti, had plans to increase its funding to Africa to US$30 billion in the next five years but Zimbabwe might not benefit from the funds unless it committed itself to tackling its debt.
"We lost a decade from 1997 to 2008 and we can't afford to lose another decade. We have to join the party," he said.
The cash-strapped government, currently generating nearly US$200 million monthly in revenue, adopted the Zimbabwe Accelerated Debt and Development Strategy - a hybrid method combining traditional debt servicing methods and strategic use of mining resources - as a way of clearing the debt.
This came after a proposal for Zimbabwe to apply for the IMF's Highly Indebted Poor Countries (HIPC) status reached a stalemate within government. The HIPC status, which was adopted by neighbouring Zambia, provides for debt relief from the IMF for countries that accept to adopt stringent macro- economic stability measures.
Apart from this debt servicing strategy, treasury also set up a debt management office in its quest to rid what has become an albatross to the coalition government.
Last year the IMF, which concluded consultations on March 17, advised government to restore stability in the banking sector. The recommendation included the Ministry of Finance restoring the central bank's lender of last resort function.