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Zimbabwe Sets Up Committee to Tackle $2,36 Billion Debt

Zimbabwean Justice Minister Patrick Chinamasa, center, speaking in parliament about Zimbabwe's ballooning debt.

Finance Minister Patrick Chinamasa has set up a committee to clear Zimbabwe’s $10 billion debt blamed for stifling economic development.

Central bank chief, John Mangudya, will chair the committee which comprises officials from the Ministry of Finance, African Development Bank, International Monetary Fund (IMF) and the World Bank.

Zimbabwe’s foreign and domestic debt has undermined the country’s creditworthiness and compromised its ability to secure new funding due to the fact that most of it is now in arrears.

Economists say much of the borrowing has been for consumption rather than production, implying that the debt is not being used to grow the economy.

Last year, the IMF’s head of mission to Zimbabwe, Dominique Fanezzi, said while the country was not going to get debt relief from multilateral institutions, there was room for flexible payment plans and terms.

Reserve bank governor, Mangudya told VOA Studio 7 that clearing arrears is key for economic development.

Zimbabwe owes $2,36 billion to the five major Paris Club creditors, namely Germany, France, United Kingdom, Japan and the United States of America. Germany is owed $85 million, France ($534m), United Kingdom ($388m), Japan ($348m) and USA ($243m).

Zimbabwe owes the World Bank $1 billion, the AFDB ($612 m), European Investment Bank (EIB) ($280 m) and the IMF ($121 m).

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