‘Debt clearance plan to crowd out private sector’

Zimbabwe’s ambition to pay back $1,8 billion to the multilateral creditors within six months will force government to borrow on the domestic market, thereby crowding out the private sector, a public policy analyst has warned.

Zimbabwe owes international funders like World Bank, International Monetary Fund (IMF) and the African Development Bank (AfDB) $1,8bn which has to be paid up in six months.

As part of the strategy, according to Finance minister Patrick Chinamasa, the government would use domestic resources to clear $111 million arrears to the IMF, arrange a bridging finance with regional and international banks to clear $601m owed to AfDB and use a medium to long-term loan facility to clear the $1,1bn arrears to the World Bank Group.

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