20100118

HARARE (Reuters) - Zimbabwe will seek highly indebted poor country status to have its $6 billion international debt cancelled to help spur economic growth, Finance Minister Tendai Biti said on Monday.

Zimbabwe's unity government, formed last year by bitter foes President Robert Mugabe and Prime Minister Morgan Tsvangirai to end an economic crisis, has failed to attract much-needed foreign aid, partly due to huge debts.

Zimbabwe has enlisted the support of the African Development Bank (AfDB) to draft a debt relief plan that would unlock access to international finance, seen as crucial to revive the economy after a decade of decline.

"There is a huge opportunity cost Zimbabwe is suffering as a result of the stifling debt. Without the debt overhang we would be growing by 15 percent annually," Biti told reporters in Harare after meeting a visiting team of senior AfDB officials.

Biti said while there were divergent views on the debt clearance strategy, seeking HIPC status -- which would require sweeping reforms and setting firm performance targets -- was the best option.

"There is no consensus position yet in Cabinet, but I've said give me an alternative that allows us to get this debt serviced without prejudicing our meagre resources," Biti said, adding that the government would make a "bold" decision on the matter within the first quarter of 2010.

PROGRESS

Visiting AfDB vice president for operations, Aloysius Ordu said although Zimbabwe's power-sharing government had made progress, there would be no full co-operation until Zimbabwe resolved the debt issue.