Posted by: APO | 13 May 2008

Zimbabwe Meets Financial Commitment with AfDB


Zimbabwe Meets Financial Commitment with AfDB

Maputo, May, 12, 2008 In a bid to actively reconnect with international donors, the Zimbabwean government last month paid part of its arrears to the African Development Bank (AfDB) Group. On April 14, 2008, the country paid US $500,000 to the African Development Bank and US$150,000 to the African Development Fund. Zimbabwe has, in all, paid US$ 650,000 to the Bank Group despite numerous economic challenges currently facing the country, both globally and locally. The country has been in arrears with the Bank Group and a recent effort to pay part of these arrears is testimony of the government’s determination to live up to its international financial obligations vis-à-vis donor agencies and development partners. These challenges have contributed to the under-performance of the agricultural, manufacturing, mining and tourism sectors. Like many other developing countries, Zimbabwe has not been spared by the global food crisis and the corresponding surge in food prices, as well escalating oil prices. The country’s domestic economic development has been characterized by high inflation, output contraction and rising interest rates. The absence of balance of payments support, declining capital inflows, recurrent droughts and rising oil prices have severely undermined the economy’s productive capacity, resulting in most industries operating below 30% capacity.

Though the country is currently experiencing balance of payments constraints resulting in delays and, sometimes, failure in meeting its financial obligations vis-à-vis donors, the government, however, fully acknowledges its external financial obligations. The government remains committed to honoring its debt obligations. In line with its commitment to fruitfully engage its partners, goodwill payments are being made with a view to normalizing relations and paving the way for new disbursements.

The government also remains committed to instituting macro-economic reforms aimed at addressing its economic challenges. It is focused on enhancing food security, foreign exchange generation and increasing the supply of basic commodities. Consistent with its policy, the government is cautiously moving the economy towards the interplay of free market conditions in the allocative and productive systems. The process is expected to be complemented with the establishment of the required safety nets targeting vulnerable segments of the society.

In this regard, it has taken some complementary measures such as ensuring that the goods and services market remains fully operational by putting in place measures that will allow for the interplay of market forces in the pricing of goods and services. This policy will focus on the revitalization of infrastructure, agricultural productivity, increased industrial capacity utilization as well as addressing some structural rigidities and enablers in the economy such as the construction of an efficient transportation network as well as the regular provision of water and energy.

The agricultural sector remains the anchor of the country’s macro-economic stabilization programme. The government therefore continues to monitor and develop the sector through the provision of agricultural equipment and implements. To date, the government has launched three phases of the mechanization programme with the fourth set be unveiled in July 2008.

It is also rehabilitating the country’s irrigation infrastructure with a view to optimizing the usage of inland water bodies. It is also contemplating the building of more irrigation schemes in areas that have inland water bodies and reservoirs.

The government is also providing concessionary finance schemes geared towards enhancing the production of strategic food crops to guarantee food security. In this regard, in collaboration with development partners such as the AfDB that are financing agriculture in the country, the Zimbabwean government will continue to ensure that the sector regains its status and plays a pivotal role in the country’s economic development.

 


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