Implementing Agency: GOVERNMENT OF ZIMBABWE MINISTRY OF FINANCE & ECON DEVELOPMENT
Location: MINISTRY OF FINANCE
The overall objective of the TA grant is to enable Zimbabwe to undertake a debt sustainability analysis and to formulate a roadmap to accessing debt relief under HIPC; and also (ii) to build national capacity to design, update and implement strategy, construct poverty reduction plans, and carry out portfolio-review analysis and for debt sustainability analysis
The project will be split into two components: HIPC Initiative Assessment exercise :This sub-component will have the following activities: (i) conduct Debt Sustainability Analysis (DNA) and HIPC initiative eligibility assessment in line with the format and procedures applied by other partners , including the IMF; (ii) designing detailed options/scenarios for external debt arrears clearance and debt relief including restructuring taking into account hypothetical traditional debt relief assumptions; (iiii)reviewing and undertaking macroeconomic forecasts; (iv) using the Debt-pro system to conduct simulations and analysis of the results as a basis for assessing the country's eligibility for debt relief under the HIPC Initiative( vi)identify any gaps in the macroeconomic, external and domestic debt database and seek ways of filling them; (vii) prepare a report on the assessment of HIPC Initiative eligibility and to senior policy makers (viii) conducting capacity building and training for country officials;(ix) conduct necessary long distance follow-up work with development partners and international institutions. Training-under this sub-component, the project will provide capacity building to civil servants working in the ZADMO to (i) acquire sufficient knowledge in the use of Debt pro system in assessing HIPC Initiative eligibility; (ii) initiative consultations on planning and negotiation on best available new borrowing policy to support economic development growth and poverty reduction; (iii) formulate negotiation strategies for maximum debt relief from creditors;(iv) develop an overview of the HIPC Initiative and eligibility criteria; and the timing and procedural steps of debt relief and poverty strategies (PRGF) under HIPC II;(v) design detailed options/scenarios for external debt arrears clearance and debt relief including restructuring (iv) analyse possible scenario based on the Debt-Pro system;(v) obtain sufficient practical knowledge in use of Debt-pro system to conduct simulations and analysis of the results;(vi) design poverty reduction policy and implementation;(vii) obtain the skills in debt renegotiation (Paris Club, non-OECD bilateral, commercial, multilateral); (viii) formulate new borrowing policy (rules, procedures, policies, implementation) and;(ix) draw up macroeconomic data and projections
Zimbabwe adopted the Accelerated Re-engagement Economic Programme in 2012 (ZAREP) which will support sustainable and inclusive economic growth. The ZAREP will also assist Zimbabwe in building a track record of sound macro-economic policies through a Staff Monitored Program (SMP) of the IMF, which was approved in 2013. The ZAREP built on the significant efforts by the Zimbabwean Government to carry forward its fiscal, monetary, balance of payments and financial and structural reform agenda. In pursuit of ZAREP's principles, the Government held a series of discussions with key multilateral donors including the World Bank, IMF and the Bank Group to build consensus among all stakeholders on the process of resolving Zimbabwe's unsustainable external debt overhang and arrears clearance. These discussions resulted in Zimbabwe signing a SMP with the IMF, covering the period April to December 2013. This was Zimbabwe's first IMF consultation agreement in more than a decade. A successful implementation of the SMP would be an important stepping stone towards Zimbabwe's re-engagement with the international community. In view of the above, Zimbabwe needs to conduct its own independent HIPC Initiative Eligibility Assessment Exercise, to help come up with possible options for arrears clearance and debt relief.