Zimbabwe makes plans to clear World Bank and African Development Bank debt

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A Reuters report notes that Zimbabwe’s new Finance Minister, Mthuli Ncube, will implement a three year program to cut government spending, in order to pay arrears owed to the World Bank and African Development Bank. Ncube insists that payment of the $1.8 billion debt will attract prospective investors and restore the confidence of the current ones.

He said repayment of the debt will help Zimbabwe qualify for an International Monetary Fund (IMF) Programme. An opportunity vital to improving an economy with a severe shortage of dollars and unemployment of above 80%.

Analysts suggest that the implementation of the three year programme will require the government to cut the civil service, and reduce the budget deficit from 16% to single digits. Previous attempts  to cut public sector wages, which is responsible for 93% of the national budget,  were cancelled by the former President Robert Mugabe.

The new finance minister confirmed the importance of this strategy. Ncube said “internally we need fiscal consolidation and making sure we live within our means or move towards that. That is always a process, always need a kind of three year process, fiscal consolidation is not a big bank approach”.

Ncube also said he would look into removing the quasi currency bond notes introduces in November 2016, in a bid to ease acute shortages of cash. He will work towards implementing currency reforms to bring back  Zimbabwe’s currency, as shortages have worsened while the black market continues to thrive.

55 year old Ncube, a Cambridge University graduate, former chief economist and Vice President at the African Development Bank, said “ultimately we would like to have a Zimbabwe dollar that is stable, that we have confidence in and we will start working towards that and you will hear in the monetary policy statements, the first steps towards that”

 

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