The African Development Bank is leading talks with Zimbabwe and its creditors to make plans for the nation to pay off some of its arrears so it can restore relations with lenders, said Akinwumi Adesina, the bank’s president.
During almost two decades of economic mismanagement the southern African nation’s debt surged to more than 70 percent of gross domestic product and the economy has halved in size since 2000, according to the government.
“We’re talking with the government and were looking for a way we can all have a common agreement and hopefully reach a mutually acceptable timeline for an arrears clearance,” Adesina said in an interview on Monday in Johannesburg. “The AfDB is spearheading that conversation with all the creditors.”
While Zimbabwe has paid $110 million of arrears to the International Monetary Fund, it’s still saddled with $1.7 billion of arrears to the AfDB and World Bank. The Finance Ministry forecast total debt of $14.5 billion in the 2018 budget.
It needs to clear the arrears so it can once again seek foreign assistance from lenders such as the IMF.
President Emmerson Mnangagwa took power in November when Robert Mugabe resigned as the nation’s leader after the military temporarily took control and effectively ended his 37-year reign. He has pledged to revive the economy and sell bonds to finance infrastructure development.
“With the new government it creates a new opportunity to support the country to unlock its potential and to stabilize,” Adesina said. A new Zimbabwe is great for “political stability and regional trade in the Southern African Development Community area.”
The nation abandoned its own currency in 2009 as runaway inflation rendered it worthless, opting instead for a basket of currencies that includes the dollar, South Africa’s rand, the pound and Botswana’s pula.