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Zim presents ambitious debt clearance plan

Harare - Zimbabwe on Thursday presented its ambitious plan to clear some of its arrears with international and regional financiers by April 2016.

The debt clearance strategy was presented at a meeting held on the sidelines of the 2015 World Bank/International Monetary Fund (IMF) annual meetings in Lima, Peru.

In its strategy, Zimbabwe plans to clear its arrears to three multinational institutions namely the IMF (US$110m), the World Bank ($1.15bn) and the African Development Bank ($601m) by the end of April 2016.

In a press release seen by Fin24, Finance Minister Patrick Chinamasa said the Lima meeting was "well attended" and "well supported" by representatives of all multilateral as well as most bilateral creditors.

“I am pleased to report that there was strong endorsement among  creditors to support Zimbabwe’s strategy to clear the arrears to the three IFIs (international financial institutions) as the preferred creditors,” said Chinamasa.

He added that clearance of the external arrears to the international financial institutions would also lead to re-engagement with both the Paris and non-Paris Club creditors. The Paris Club is a group of creditor nations who aim to find solutions to debtor nations' payment problems.

The strategy also involves development of a new comprehensive Country Financing Programme supported by the AfDB, the IMF and the World Bank to attract long-term financing to promote growth and debt sustainability.

However, it remains to be seen how the Harare government will raise $1.8bn in the less than seven months up to April 2016.

Revenue generation has been subdued, with the country missing its target for the half-year to June 2015. The revenue authority blamed the poor revenue performance on a “myriad of challenges”.

READ: Zim misses revenue target as economy stutters

Revenue for the six months to June amounted to $1.6bn less than the $1.8bn debt.

Zimbabwe expects to collect $3.6bn in revenue during 2015.

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