The Chairperson of the Paris Club has responded to Zimbabwe Finance Minister Mthuli Ncube’s letter dated April 2, in which he was seeking financial assistance.
Chairperson of the Paris Club, Odile Renaud Basso, who is also Director-General of the French Treasury told Ncube that for Zimbabwe to normalise relations with the international community, it has to implement substantive and sustainable political reforms. She wrote:
Dear Minister Ncube
Thank you for your letter dated April 2, 2020, regarding Zimbabwe’s current situation.
Paris Club members take note of Zimbabwe’s prolonged humanitarian crisis and the worrisome economic and financial situation of the country.
They acknowledge these difficulties are exacerbated by the impact of the COVID-19 pandemic.
They welcome the partial progress made by Zimbabwean authorities in implementing economic reforms in some areas in 2019, in particular on fiscal consolidation.
Paris Club members insist, however, on the fact that the Government of Zimbabwe’s desire to normalize its relations with the international community can only advance following the implementation of substantive and sustainable political and economic reforms, in particular regarding the respect for human rights, especially freedoms of assembly and expression.
Paris Club members stand ready to support positive developments if they are substantive and sustainable.
To this end, successful implementation of an International Monetary Fund (IMF) Staff-Monitored Program (SMP), when the country has demonstrated its readiness to begin such a program, would be an important first step, as would be progress on political reforms.
Poor performance under the SMP of May 2019 is a missed opportunity in this regard. We encourage you to press forward with a credible reform program to stabilize the economy and strengthen economic governance.
The Paris Club recognizes that Zimbabwe could benefit from a debt treatment from Paris Club creditors, should this be requested by Zimbabwean authorities and should it be favourably assessed by Paris Club members.
Such a debt treatment would be based on an assessment of the financial needs of Zimbabwe to bring its external debt to sustainable levels.
Before any Paris Club treatment, a prior condition is multilateral arrears clearance.
The normalization of relations, including any potential debt treatment, can only begin once Zimbabwe has cleared all arrears to International Financial Institutions, in particular to the World Bank and the African Development Bank.
In addition, the Paris Club will be closely monitoring IFI support to Zimbabwe for COVID19 assistance programs, which must be implemented transparently and in full compliance with its goal and rules.
Zimbabwe will also have to establish a satisfactory track record in an IMF program of upper credit tranche (UCT) quality.
Once the country has met these criteria, it can request to enter formal discussions with the Paris Club on debt restructuring.
Paris Club creditors encourage Zimbabwe to develop a sustained dialogue on economic development and debt issues with the Paris Club Secretariat.
The Secretariat (email@example.com) remains at your disposal should you need any further information.