Harambe: PM: Vietnam values comprehensive partnership with US | Vietnam+ 5/26/23
Vietnam always treasures comprehensive partnership with the US, Prime Minister Pham Minh Chinh told a delegation from the US Senate led by Senator Mike Crapo in Hanoi on May 26.
PM Chinh spoke highly of the maintenance of high-level contacts, especially the recent successful phone talks between Party General Secretary Nguyen Phu Trong and US President Joe Biden.
He suggested that in the near future, both sides continue enhancing cooperation in the fields of economy, trade, investment, science and technology, education and training, innovation, digital transformation, and climate change response.
The host asked the US senators to support the US opening its market to and limiting anti-dumping investigations and trade remedy measures against Vietnamese goods, especially agro-forestry-fisheries, which directly affect the people’s livelihoods.
He also urged the US Congress to continue heeding and allocating resources for cooperation with Vietnam in overcoming the war consequences, as well as offer support to the Vietnamese community in the US.
Expressing their impression on Vietnam’s country, people, and development, the US senators said they support a strong, independent, self-resilient, and prosperous Vietnam and respect its independence, sovereignty, and political regime.
They said they will promote substantive and effective relations between the two countries, wish for stronger partnerships in trade and investment, and support negotiations on bilateral and multilateral trade agreements of which both countries are members.
The guests vowed to back Vietnam’s and ASEAN’s stance on the East Sea issue and underlined the need to maintain peace, stability, freedom, security and safety of navigation and overflight in the waters.
Harambe: Zimbabwe’s Debt Crisis: Here Are The Lenders And How Much They Are Owed | Pindula (5/26/23)
President Emmerson Mnangagwa and Finance and Economic Development Minister Mthuli Ncube attended a Roundtable meeting on Zimbabwe Debt Arrears Clearance in Sharm el-Sheikh, Egypt recently.
The roundtable meeting was held on Wednesday evening and was a side event during the African Development Bank (AfDB) annual general meetings.
Zimbabwe is facing an external debt crisis which has made it difficult for the country to secure loans from international financial institutions such as the International Monetary Fund (IMF) due to arrears.
What Is External Debt?
According to an online source, external debt or foreign debt is the portion of a country’s debt that is borrowed from foreign lenders, including commercial banks, governments, or international financial institutions.
These loans, including interest, must usually be paid in the currency in which the loan was made.
If a country cannot repay its external debt, it is said to be in sovereign debt and faces a debt crisis.
Zimbabwe’s Debt Inherited From Rhodesia
Debt Justice says Zimbabwe inherited a sizeable debt from Rhodesia, which grew through the 1980s, that is, the first decade after the country gained independence.
In 1980, Zimbabwe inherited a US$700 million debt from the Rhodesian government of Ian Smith.
The loans had been used to buy weapons in the 1970s, breaking United Nations (UN) sanctions.
The new Government reportedly came under international pressure to take on the debt, whilst being promised over US$2 billion by Western governments for reconstruction and development. Most of the aid money reportedly never materialised.
Zimbabwe also received loans from the United Kingdom and Spain to buy Land Rovers and military aircraft and from the World Bank to plant trees.
By 1990, to keep paying the debt, Zimbabwe had to take out bailout loans from the IMF and World Bank.Zimbabwe defaulted on repayments in 2000 and the lenders stopped lending to the country.
What Is a Default?
Default is the failure to make required interest or principal repayments on a debt, whether that debt is a loan or a security.
Sovereign default occurs when a country does not repay its debts. Though a country cannot be forced to satisfy its obligations by a court, countries that default on sovereign debt might have trouble borrowing again and are likely to have to pay a higher interest rate if they get the chance.
According to Investopedia, the common causes of sovereign defaults include economic stagnation, political instability, and financial mismanagement.
How Much Does Zimbabwe Owe?
In October 2022, the Ministry of Finance’s Public Debt Management Office released a medium-term debt management strategy that had the latest data on the extent of the country’s debt crisis.
It said the total Public and Publicly Guaranteed (PPG) debt in December 2021 was US$17.2 billion.
This was made up of external debt of US$13.4 billion (77.9%) and domestic debt of US$3.8 billion (22.1%).
The total public debt included blocked funds of US$3.533 billion and an obligation of US$3.5 billion to compensate white former farmers for improvements on resettled land.
Besides the principal amounts owed, Zimbabwe also has arrears and penalties because of not paying its debts on time.
What Are Arrears?
When a country is said to be in arrears, it would have failed to make regular contractually required payments. The term arrears applies to an overdue payment.
In December 2021, Zimbabwe had piled up external debt arrears and penalties of US$6.6 billion. This included penalties of US$2.01 billion by December 2021.
Of the total external debt arrears, US$4.2 billion (63%) was due to the bilateral creditors, while US$2.4 billion (37%) was due to the multilateral creditors such as the World Bank and others.
Who Does Zimbabwe Owe?
As of December 2021, Zimbabwe owed US$5.6 billion to bilateral creditors – such as individual countries – and US$2.7 billion to multilateral creditors – international financial institutions.
US$3.9 billion is owed to the Paris Club. This is a group of creditor countries that has 22 permanent members that include Australia, Austria, the UK, Japan and the USA.
US$1.8 billion is owed to the non-Paris Club bilateral creditors.
US$1.5 billion is owed to the World Bank
US$711 million is owed to the African Development Bank
US$358 million is owed to the European Investment Bank
Zimbabwe owes US$111 million to creditors under the 2015 RBZ Debt Assumption Act, while US$4.9 billion is external debt on RBZ’s balance sheet.
Zimbabwe’s Chinese Loans
In 2022, Ncube told Parliament that Zimbabwe had borrowed US$2.7 billion from China since 1980.
He said the outstanding debt to China as of August 2022 amounted to US$1.768 billion.
Most of the Chinese loans have been borrowed for infrastructure projects but Zimbabwe was struggling to service some of the running Chinese loans.
According to the mid-term Debt Management Office, China was not releasing as much of the loans as needed because Zimbabwe was in arrears.
Treasury said Zimbabwe was in arrears on loans for the Victoria Falls Airport (US$65.36 million), NetOne Network Expansion Phase I & II (US$66.65 million) and TelOne National Broadband Expansion Project (US$8.0 million).
Zimbabwe’s Arrears Clearance And Debt Process
In 2022, President Emmerson Mnangagwa appointed African Development Bank President Akinwumi Adesina as leader of Zimbabwe’s arrears clearance and debt process.
Addressing delegates during the inaugural Dialogue Platform on Zimbabwe’s Arrears Clearance and Debt meeting at the Rainbow Towers Hotel in Harare in 2022, Ncube said Adesina had agreed and committed to working with other institutions to support Zimbabwe in clearing its arrears and resolving its debts owed to international creditors.
Former Mozambique president, Joachim Chissano, was appointed the facilitator between the Zimbabwean government as a debtor, bilateral credit partners, and other relevant stakeholders.
Chissano is being supported by a technical advisor the former prime minister of Mozambique, Luisa Diogo.
In October 2022, Ncube said the country had started to make token payments to the IMF, World Bank, and other lenders. He said:
We’ve begun to make token payments to the World Bank, the AfDB (African Development Bank), European Investment Bank.
And all the Paris Club creditors, 17 of them, we will be making token payments to show that we want to be a good debtor.
Ncube also said IMF staff would visit Zimbabwe in December and then discuss a staff-monitored programme in the first and second quarter of 2023.
He said this would enable access to “resources from a sponsor who will help us with bridge funding in order to clear the arrears” to international lenders.
Ncube said the “sponsor” will help Zimbabwe to restructure its debt to bilateral Paris Club creditors.
Debt restructuring is a process that involves getting lenders to agree to reduce the interest rates on loans, extend the dates when the debtor’s liabilities are due to be paid, or both.
Zimbabwe’s Debt Crisis And Reforms
In May 2023, Mnangagwa told development partners and creditors that Zimbabwe was committed to implementing key reforms that are critical to resolving the country’s debts and arrears.
He was speaking during the high-level debt resolution forum in Harare which was also addressed by Adesina and Chissano.
The Herald reported that the majority of Zimbabwe’s combined US$8.3 billion bilateral and multilateral debt was accounted for by arrears.
However, in May 2023, Trading Economicsprojected Zimbabwe’s External Debt to trend around US$18.6 Million in 2023.
South Africa’s Finance Minister Enoch Godongwana said that his country supports Zimbabwe’s implementation of key reforms to resolve its debt problems.
Gondongwana presented a message of support during a round-table meeting on Zimbabwe’s debt arrears clearance at the African Development Bank (AfDB)’s 2023 annual meetings.
He said any challenge faced by Zimbabwe will also affect South Africa’s economy.
Zimbabwe is a major market for South African products. South Africa also hosts millions of Zimbabwean economic refugees.
Adesina said Zimbabwe’s arrears clearance and debt resolution involves governance, rule of law, human rights, freedom of speech, and electoral reforms among other issues. He said:
The issues are not just economic or financial. They also involve governance, rule of law, human rights, freedom of speech, political level playing field, electoral reforms that will assure free and fair elections — as well as fairness, equity and justice for the commercial farmers and other businesses who were dispossessed of their lands, for which there is a clear need for restitution and compensation.
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