THE African Development Bank (AfDB) has disbursed US$800 000 of a US$3 million loan to Treasury to support its arrears clearance process, sustainable management of debt and enhance public oversight, businessdigest understands.
The full loan, which was approved in September 2022, is expected to be fully disbursed by the end of 2025.
In December 2022, government established a ‘Structured Dialogue Platform’ with all its creditors and development partners, to institutionalise structured dialogue on economic and governance reforms to underpin the arrears clearance and debt resolution process.
Since then, the country has been conducting debt-structured dialogues with its creditors to map a way forward on its debt arrears clearance strategy.
This comes as external debt stood at US$12,68 billion as of the end of September.
In its latest report, the AfDB said the implementation of the project was well on track, but more attention needed to be given to procurement management.
“Save for the debt/GDP ratio that requires well focused economic reform program and enhanced political dialogue, the outcome level targets are on track. The overarching development objective of the project is to support arrears clearance process, sustainable management of debt and enhance public oversight, thereby contributing to macroeconomic stability and fiscal consolidation,” AfDB said.
“The specific objectives of the project are to: enhance capacity on arrears clearance and debt management; strengthen governance and oversight function of Government. The Project has three components, namely, enhanced capacity on arrears clearance and debt management; Strengthened accountability and oversight; and Project management.”
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“Arrears clearance and sustainable debt management are critical for macroeconomic stabilisation and fiscal consolidation while combating corruption and strengthened oversight prerequisites prudent use of public resources and re-engagement with the international community,” AfDB said.
However, the bank raised concerns on risks that affect the project.
These include political instability resulting from 2023 disputed elections.
The bank also raised concern on unstable economic environment, leading to high inflation, fiscal and current account deficits, thereby increasing public debt mostly owing to currency depreciation.
Year to date, the Zimbabwe dollar has depreciated by over 700% against the greenback.
This, the bank said, would affect cost of project activities and attainment of project goals.
“Weak project implementation capacity could lead to start-up delays and affect pace of project implementation delay in project while there are also risks around procurements and abuse of project resources,” AfDB said.
“As mitigation the African Capacity Building Foundation (ACBF) is managing resources in the special account. The PMU (Procurement Management Unit) is experienced and understand Bank’s procurement and financial management rules and policies. The project is using an existing PMU which is well experienced in implementing Bank funded project.”
Concerning political instability, the bank said there was a high-level engagement on governance process which was on-going process.
It said the project focused on participation of all stakeholders who had agreed to work together in addressing challenges facing the country.
