Source: Gift Phiri, Daily News
The United Kingdom (UK) has ruled out any involvement in a fresh bailout for Zimbabwe after suggestions that a mechanism backed by a high-ranking advisor to the British government could provide bridge financing for Harare.
UK’s Harare Embassy spokesperson, John Culley, yesterday quashed reports that former British minister, Peter Mandelson — chairman of Lazard International, a division of United States investment bank, Lazard, had suggested to Foreign Secretary, Boris Johnson, that Zimbabwe needs “encouragement, debt restructuring, and an injection of additional liquidity” to enable a smooth transition of power.
Culley told the Daily News that UK maintains its stance not to bail out President Robert Mugabe’s hard-pressed government.
“The short answer is no,” he said.
“We have been consistent and clear that we will not be providing any form of financial assistance to the government of Zimbabwe or organise a ‘bailout’,” Culley said.
Instead, he said “the UK is in support of Zimbabwe’s efforts to implement economic and political reforms committed to at Lima in 2015.”
The Lima plan — consummated in Peru last October — committed Harare to amortising its $1,8 billion arrears to international financiers for it to access fresh African Development Bank (AfDB) bridge funding before the end of 2016.
While the UK has backed the plan, it has expressed concern over continuing rights abuses at the hands of Mugabe’s regime, warning that if the current political unrest and crackdown continues, the deal would be off.
Last month, Zimbabwe paid $107,9 million to clear its IMF debt, after accessing its special drawing rights holdings held by the Bretton Woods institution over the past seven years, enabling government to clear its arrears to the fund’s Poverty Reduction and Growth Trust.
Subsequently, government was granted access to $91,2 million, held in an escrow account pending the settlement.
Besides the almost $110 million previously owed to the IMF, Zimbabwe also owes $1,1 billion to the World Bank and $601 million to the AfDB.
IMF suspended Zimbabwe’s voting rights in 2003 over policy differences with Mugabe’s government and payment arrears to the global lender.
The rights were restored in 2010, allowing the nation to participate in IMF decision-making again.
Culley said a couple of things must be put in place before fresh funding to Zimbabwe.
“Only once arrears have been paid off and a track record of reform is established, will Zimbabwe be eligible to secure new funds from the international financial institutions to support delivery of the reform process and to boost investment in vital infrastructure and human capital,” he said.
“These new funds will only become available if the shareholders of the international financial institutions agree.”
London has been at the forefront of powerful Western countries withholding financial aid to Harare as punishment over Mugabe’s policies, but has been generous with humanitarian aid.
This has hit the fragile economy hard, causing it fall into a painful recession this year.
Amid a torrent of rhetoric from London, Mugabe — Africa’s oldest leader who has held power since independence in 1980 — has protested that the former colonial power still treats Zimbabwe as its protectorate and seeks to maintain influence in the mineral-rich country.
This comes as government is grappling with a deepening cash crunch, forcing it to promulgate emergency measures on Monday to introduce bond notes, a surrogate currency that will trade at par with the US dollar, in a futile bid to ease a worsening liquidity crunch that has heightened panic in the domestic economy.
Culley said Zimbabwe needs fundamental reform of the economy, of public finances and expenditure, implement human rights and the new Constitution adopted in 2013 and protect the most vulnerable.
“It will all take time and require difficult decisions,” he said.
He also rejected claims that the UK is planning for a Zimbabwe transition phase.
“It is not our role to get involved in the discussions about who leads Zimbabwe,” he said.
“The most important thing the international community can do is set out a path to normal relations between Zimbabwe and the international community and do all we can to encourage Zimbabwe to follow it,” Culley said.
Source: Gift Phiri, Daily News