HARARE - UK Development minister Andrew Mitchell has rejected civil society calls to audit Zimbabwe’s $7 billion debt before admitting the southern African county into the Highly Indebted Poor Countries (Hipc) initiative. 
Hipc is a debt relief programme managed by the World Bank, the International Monetary Fund (IMF) and the African Development Bank (AfDB).
In a letter seen by the Daily News, Mitchell out-right rejects calls by the Zimbabwe Coalition on Debt and Development (Zimcodd) and the Zimbabwe Europe Network (Zen) to conduct an official audit of the $7,4 billion debt to increase accountability over the country’s finances and help give Zimbabwe’s people control over their economy.
The two civil society groups, who are spearheading the so-called “Jubilee Debt Campaign,” wrote to the British minister after it emerged that Finance minister Tendai Biti had engaged the UK embassy in Harare to work out an arrears’ clearance strategy that will see the country pursue the HIPC route.
President Robert Mugabe’s Zanu PF has already thrown down the gauntlet and warned that they will not allow Biti to get Zimbabwe declared a HIPC as a debt write-off strategy saying the country was not poor but saddled with sanctions.
Biti says the $7,4 billion debt was precluding the country from desperately needed fresh lines of credit and Hipc status will ensure the debts are written off even though the country will have to adhere to tough macro-economic conditions prescribed by international finance institutions.
Zimcodd and Zen had proposed that before declaring Zimbabwe a Hipc, the Zimbabwean Parliament must first create a “Debt Audit Commission” which would investigate how the $7,4 billion debt was run up, and who benefitted from the loans, and learn lessons for future borrowing.
Mitchell said in his January 5, 2012 letter to Zimcodd and Zen, lending by international donors was not the primary cause of Zimbabwe’s economic decline, which accelerated rapidly after 2000.
“President Mugabe’s reckless economic mismanagement bears the major responsibility for the crisis that reached its nadir in 2008, with hyperinflation, the near collapse of basic services and a humanitarian crisis that affected more than seven million people,” Mitchell’s letter says.
“The UK does not support a debt audit, which the (Zimcodd and Zen) report recommends as a way for discussions of debt cancellation to be informed by the ‘legitimacy’ of the original loans. Loans made to internationally recognised governments are bound by legal contracts and recognised in international law."
“Attempting after the fact to distinguish between legitimate and illegitimate debts could cause lenders to refuse to provide further loans and would be catastrophic for developing countries attempting to strengthen their economies and reduce poverty through accessing international financing.”
Tor-Hugne Olsen, co-ordinator for Zen, was moving to approach the AfDB president Donald Kaberuka asking him to release all information relating to Zimbabwe’s debt profile.
The Daily News understands the AfDB is taking the lead for creditors in discussions with Biti on what to do with the country’s $7 billion debt. Biti has contracted a “debt expert” with the assistance of the AfDB to assist government in formulating an external debt and arrears clearance strategy which will form the basis for debt relief.
The two civil society groups want the AfDB to release all information and evaluation of the AfDB loans which helped to create Zimbabwe’s $7 billion debt and signal that the bank would support and co-operate with a debt audit in Zimbabwe.
Meanwhile, Mitchell says in his letter the UK government was working with the international financial institutions and with donors to clarify Zimbabwe’s indebtedness and establish its eligibility for debt relief under Hipc.
“We support this work and have provided all the information on UK debt requested by the government of Zimbabwe, as it works through this process,” Mitchell says in the letter.
The British Development minister emphasises in the letter that debt relief and clearance of Zimbabwe’s arrears was an important element in securing the country’s economic stability, “not least because it will enable Zimbabwe again to access international finance to fund its development and reduce poverty.”
As the coalition government grapples with rebuilding a country ravaged by more than a decade of economic and political turmoil, it has indicated that it needs about $8.5 billion in emergency aid to revive the economy.
“Debt relief to Zimbabwe could of course only be given once the country has completed its political transition, through free and fair elections that lead to a reforming government committed to equitable and sustainable development,” Mitchell said in the letter.
Dewa Mavhinga, regional co-ordinator for pro-democracy pressure group Crisis in Zimbabwe Coalition said Mitchell had clearly misunderstood the calls for a national debt audit. “It is not a repudiation of Zimbabwe’s legal loan contracts, but a mechanism to ensure a full measure of transparency and accountability,” Mavhinga told the Daily News.
“The people of Zimbabwe, through a Parliamentary Debt Audit Commission, have a right to know what loans the government of Zimbabwe acquired; for what purpose, and whether or not the borrowed money was actually used for its intended purpose. Zimcodd and Zen are correct to demand a debt audit before a decision on whether to declare Zimbabwe a Hipc country is taken.”

By Daily News