Clearing Zimbabwe's debt is "the only way" to re-engage the country
The African Development Bank (AfDB) is in talks with Zimbabwe to clear nearly $6 billion (€4.23 billion) of debt from the country.Aloysius Uche Ordu, one of the Bank's Vice-Presidents, commended the government’s attempts to repair the economy and stated that this is the only way multilateral finance institutions will begin to engage with the country again.
According to a report by AFP, different options have been considered to clear the arrears, including cancelling the debt entirely in order to obtain new financing.
In order for the country to be able to obtain further assistance, the AfDB is recommending that the country be considered for HIPC Initiative assistance.
In the long-term, the repayments will continue to stifle Zimbabwe's attempts to access new wealth, said Finance Minister Tendai Biti, who forecast growth of 15 per cent if the debt was serviced.
Established in 1996, the HIPC initiative aims to provide the means by which indebted countries can reduce poverty and stimulate economic growth.
The HIPC Initiative was launched in 1996 by the IMF and WB as a comprehensive approach to debt reduction with the aim of ensuring that no poor country faces a debt burden it cannot manage.