Zim, IFAD Sign Debt Rescheduling Agreement

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ZIMBABWE and the United Nations International Fund for Agriculture Development (IFAD) yesterday signed a debt re-scheduling plan that immediately unlocked access to a US$60 million facility for the country.

Finance Minister Patrick Chinamasa is expected to deliver the 2015 National Budget on Thursday

Finance Minister Patrick Chinamasa is expected to deliver the 2015 National Budget on Thursday

IFAD is a specialised UN agency established as an international financial institution in 1977. IFAD began its activities in Zimbabwe in the 1980s through support to the agricultural sector and to date they have administered five loans and several grants towards agricultural development which include

  • National Agricultural Research and Extension Project – 1983;
  • Agricultural Credit and Export Promotion Project – 1990;
  • Smallholder Dry Areas Resource Management Project (SDARMP)- 1995;
  • South Eastern Dry Areas Project (SEDAP)- 1998; and
  • Smallholder Irrigation Support Project (SISP)- 1999;

In total, the country accessed support worth nearly $246 million.

However as at the end of July 2015, the arrears to IFAD amounted to SDR 16,319,004 ($22,683,415). Finance and Economic Development minister Patrick Chinamasa said the situation with the arrears had adversely affected Government – IFAD cooperation as the governing laws of the fund do not allow full engagement and allocation of new resources when a member is in arrears.

IFAD director for East and Southern Sana Jatta lauded the Zimbabwean government’s efforts to re-engage with the agency and commitment to repay its dues.

“Against all odds, financial and otherwise, the (Zimbabwean) government made a proud decision to repay its arrears with IFAD in five years, instead of the 10 years that IFAD was initially willing to accept,” Jatta said.

Under the deal, Zimbabwe paid at least 10 percent of its IFAD debt, amounting to $2.3 million and also committed to pay an additional $300 000 to IFAD’s core resources for the period 2016-2018.

Jata said signing of the agreement unlocked funding which will benefit over 20 000 households covering about eight hectares of irrigable land, assisting in the fight against poverty through support to irrigation rehabilitation and development in the country.

Chinamasa, who signed the agreement on behalf of Government, said the facility would be availed to mainly to farmers in the horticulture sector on a cost recovery basis.

“The resources we are going to get are not for free but on a cost recovery so that we keep repaying and make it a revolving facility,” he said.

Chinamasa said the government was prioritizing irrigation development given the effects to climate change, which is impacting on agricultural yields.

He said Zimbabwe will do all in its power to ensure it sticks by the agreement and ensure the re-engagement with IFAD succeeds.

Re-engagement between the two parties only began three months ago and were already bearing fruits, he said.

“Signing of this agreement with IFAD is one of the many steps we have been taking to re-engage with the international community,” he said. FinX