The development was communicated by Adesina at the AfDB’s ongoing Annual General Meeting (AGM) in Accra, Ghana.
Unsustainable sovereign debt, which now stands at $19 billion, has been blamed for blocking the country’s access to affordable long-term financing from multilateral and bilateral lenders, hampering economic recovery efforts.
Adesina told reporters, “I have written to the President of Zimbabwe that I humbly accept what you have asked me to defend as the Vice President has declared clearance of arrears and I know that with understanding and the support of our partners, we’ll get there soon.”
The Minister of Finance and Economic Development, Prof. Mthuli Ncube first revealed the bank’s willingness to help Zimbabwe settle its debt when he met the AfDB President in Washington DC, United States States last month, where the two were part of the World Bank’s annual meetings.
“The AfDB President has come forward as a candidate to help the country come up with good staff-controlled programs which also include the International Monetary Fund (IMF),” Minister Ncube said at the time.
Dr Adesina said Zimbabwe was once the breadbasket of the region and “it is in everyone’s interest to have a revitalised, renewed and energized Zimbabwe”.
Minister Ncube said Zimbabwe was working on a debt clearance path with its creditors, which may involve staff follow-up programs monitored by the International Monetary Fund to find a sponsor who can help Harare repay its foreign debts.
Debt sponsorship occurs when a country finds another country to repay its debt with the International Financial Institutions (IFIs) and in turn obtains a loan “on favorable terms” to be used to repay part of the debt of sponsorship. This gives the country a more favorable borrowing platform than obtaining expensive loans from bilateral lenders.
While in Washington DC, the Minister of Finance held re-engagement meetings with various lenders on the sidelines of the meeting, including the 17 members of the Paris Club.
According to Minister Ncube, the country has made token payments to its creditors who expressed their gratitude for the gesture but stressed that the intention was to erase the entire debt.
Zimbabwe has started making token payments to all its foreign financiers including the Paris Club, which has 17 members, the World Bank and the African Development Bank (AfDB).
“We are now making token payments to the 17 Paris Club members, this means we are now serving all our creditors, and payments have been made quarterly for the past 9 months,” Minister Ncube said last month.
“So we are committed as a bank to that. We will walk with our partners. We will walk with the World Bank. We will walk with the IMF, we will walk with all the bilateral partners. My vice-president [Yacin Fal] just went,” Adesina concluded.
Zimbabwe is currently ineligible for IFI loans due to its external debt, which exempted it from Covid-19 debt relief, which was extended to neighbors South Africa and Zambia.
“Zimbabwe has been a member in good standing of the IMF since repaying arrears due at the end of 2016. However, Zimbabwe has external arrears to multilateral development institutions (World Bank, AfDB and EIB). IMF is not permitted to lend to any member country that is in arrears with other international financial institutions,” the IMF said in November 2021.