Finance minister says government to approach World Bank, IMF for new loans

Zimbabwe will seek fresh loans from the World Bank, IMF and African Development Bank (AfDB) as it struggles with slowing growth, subdued commodity prices and high unemployment, Finance Minister Patrick Chinamasa said on Thursday.

President Robert Mugabe's government started defaulting on its debt to the IMF, World Bank, African Development Bank and several Western lenders in 1999 and is struggling to emerge from a catastrophic recession that ran for a decade until 2008.

"What we agreed with the three multilateral institutions, is that we start now a country financing programme," Chinamasa said, without giving details on the amount of funding Zimbabwe was seeking.

Chinamasa said it would first be borrowing to help pay the $1.86 billion in arrears it owes the three multilateral institutions, which would help reduce interest costs and avoid default penalties.

READ: A decade after write-offs, Africa sliding back into debt trap

Zimbabwe will use drawing rights it has with the IMF to clear the $110 million in arrears it owes the fund, while loans from the African Export-Import bank would be used to clear $601 million in arrears with the AfDB.

The southern African country will raise cheaper loan capital to clear $1.15 billion in arrears to the World Bank.

"You are substituting one debt with another but with a different time frame and a different interest rate and then you don’t suffer the penalties," Chinamasa told reporters.

"Much of the debt that we have accumulated with our creditors is arising from default."