Africa
Zim Settles $700 Million Debt
By Afrol News, 12/5/08
May 13, 2008 - 9:04:10 AM

"Zimbabwe has, in all, paid $700m to the Bank Group despite numerous economic challenges currently facing the country, both globally and locally," the bank group said in a statement, attributing the country's efforts to pay its debt to "testimony of the government's determination to live up to its international financial obligations obligations vis-à-vis donor agencies and development partners."

On 14 April 2008, Zimbabwe paid US $200m to the African Development Fund and US $500m to the African Development Bank.

Zimbabwe's challenges have contributed to its under-performance in the agricultural, manufacturing, mining and tourism sectors.

Like many other developing countries, the Southern African country has not been spared by the global food crisis and the corresponding surge in food prices, as well escalating oil prices.

Besides, its 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 bank group said.

"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."

Zimbabwe has also been commended for its commitment to "instituting macro-economic reforms aimed at addressing its economic challenges." Its focus on enhancing food security, foreign exchange generation and increasing the supplies of basic commodities was noted.

Meanwhile, the bank group warned that the near doubling of prices of some staple food crops in recent months had serious implications for Africa, especially the poorest nations where poor people were forced to spend huge proportion of their income on food.

In a new report - Africa Economic Outlook - launched Sunday, the bank called for an urgent action.

"Besides the rising price of crude oil, in the last three months since January 2008, prices of some major food crops have nearly doubled,’ the report said.

It said prices of major staple crops had doubled in the three months after January this year. The price of rice was increased from US $373 per tonne to US $760 while that of maize increased from US $171 per tonne to US $220.

"These large and sudden price increases have now started to have severe implications in many African countries."