gtag('config', 'UA-12595121-1'); Zimbabwe misses out on US$170bn World Bank facility – The Zimbabwe Mail

Zimbabwe misses out on US$170bn World Bank facility

Spread the love

Zimbabwe will once again miss out on a multi-billion package that the World Bank has put in place to help developing countries navigate multiple, compounding crises that are hitting the poor and most vulnerable the hardest.

The global lender has put in place a US$170 billion crisis response package that is meant to help countries deal with rising inflation, large macroeconomic imbalances, and the shortages of energy, fertilizer and food – all factors affecting Zimbabwe.

Of the total amount, US$105 billion will be provided by the World Bank (IBRD and IDA), US$48 billion by the International Finance Corporation (IFC) and almost US$9 billion by the Multilateral Investment Guarantee Association (MIGA).

Nearly US$9 billion is expected to be financed through trust funds.

“The WBG has already delivered about US$53 billion of this support during April-June 2022, as it stepped up support for food security and continued to deepen its pandemic response.”

Commenting on the package, World Bank Group President David Malpass said the global lender “is responding with speed, scale and impact with financing to respond to food insecurity, protect people, preserve jobs, strengthen resilience, and restore growth”.

The World Bank said the allocation of resources across countries and issues will evolve according to specific needs and the strength of programs that achieve development and support people on the ground.

The crisis response framework includes among other factors responding to Food Insecurity through supporting production, facilitating trade, supporting the vulnerable and investing in sustainable food systems.

It will also include protecting people and preserving jobs to help mitigate the medium- to long-term impact of crises.

However, Zimbabwe will not benefit from this package as it is not eligible for lending from the World Bank.

According to Cheryl Khuphe, Communications Specialist, at the World Bank’s Harare Country Office, Zimbabwe does not qualify for lending.

“As you probably know, the World Bank’s lending programme in Zimbabwe is inactive at this point and our role is now limited to technical assistance and analytical work through Trust Funds,” Khuphe said by email.

This is not the first time Zimbabwe missed out on a World Bank facility.

In June, the World bank availed US$2,3 billion to help countries in Eastern and Southern Africa increase their resilience of the region’s food systems and ability to tackle growing food and nutrition insecurity.

Zimbabwe did not qualify because of “its non-accrual status” according to Holger Kray who is the Practice Manager for Agriculture and Security at the World Bank.

A country assumes nonaccrual status if payment of debts in full of principal or interest is not expected, or if principal or interest has been in default.

Zimbabwe’s public external debt stock was estimated at US$13,2 billion as per the 2022 National Budget Statement.

Of that external debt, US$5,45 billion is owed to bilateral creditors while US$2,67 billion is owed to multilateral creditors.

A total of US$5,18 billion of the non-guaranteed debt is in arrears while US$1,4 billion of guaranteed debt is in arrears. The country has not been able to service this debt for years and has only started making token payments to lenders. However, this is not enough to unlock new facilities.

‘Due to its nonaccrual status, Zimbabwe is currently ineligible to receive funding from International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA), said Kray.

‘Zimbabwe’s participation in future phases will be subject to the country becoming eligible for IBRD/IDA financing,’ he added. – Business Weekly