The Paris Club has spurned the Zimbabwean government’s appeal for a bailout saying no financial assistance will be extended to Harare until satisfactory reforms implemented.
Paris Club comprises major shareholders in international financial institutions, the International Monetary Fund (IMF) and the World Bank,
Finance Minister Mthuli Ncube wrote to the IMF, World Bank and Africa Development Bank last April passionately requesting for financial assistance.
He pleaded that the money was urgently needed to save Zimbabwe from total collapse.
“Zimbabwe’s economy could contract by 15-20 percent during 20202 with very serious consequences. Already 8.5 million Zimbabweans (half the population) are food insecure,” Ncube wrote in his letter.
“The global pandemic will take a heavy toll on the health sector with many lives being lost and raise poverty to levels not seen in recent times, including worsening food insecurity.
“A domestic collapse would have also have potentially adverse regional effects, where spill-overs are significant.”
But Paris Club president Odile Renaud-Basso wrote back to Ncube stating that the institution was not in a position to help Zimbabwe.
“Paris Club members insist on the fact that the government of Zimbabwe’s desire to normalise its relations with the international community can only advance following the implementation of substantive and sustainable political and economic reforms, in particular the respect for human rights, especially the freedom of assembly and expression,” reads Renaud-Basso’s letter, which was submitted to Ncube on June 12, 2020.
The Paris Club also said Zimbabwe had missed its opportunity to access IMF loans by failing to successfully implement its staff monitored programme (SMP) of May 2019.
Renaud-Basso said the Club can only talk to Zimbabwe after clearing its outstanding debts to the Bretton Woods institutions.
“To this end, a successful implementation of an IMF SMP when the country has demonstrated its readiness to begin such a programme would be an important step as would be progress on political reforms.
“Poor performance under the SMP for May 2019 is a missed opportunity in this regard. We encourage you to press forward with a credible reform programme to stabilise the economy and strengthen economic governance,” the letter further reads.
“Before any Paris Club treatment, a prior condition is multi-lateral arrears clearance. The normalisation of relations, including any potential debt treatment, can only begin once Zimbabwe has cleared all arrears to international financial institutions.
“In addition, Paris Club be closely monitoring international financial support to Zimbabwe for Covid-19 assistance programmes which should be implemented transparently, and in full compliance with its goals and rules. Once the country has met these criteria, it can request to enter formal discussions with the Paris Club for debt restructuring,” Renaud-Basso wrote.