HARARE - Zimbabwe cannot afford to dictate terms and conditions when negotiating credit lines because the country is desperate, Finance minister Patrick Chinamasa has said.
He said the country is “forced to dance to the tune of those who avail loans”.
His remarks come on the back of industry players accusing him of facilitating shoddy tender bidding processes and side-lining local businesses.
“Like I said… it’s always important to realise where you are and craft policies to get out of your situation,” he told a Buy Zimbabwe Public Procurement conference on Wednesday.
“And where we are now is that we have a huge power deficit and I cannot afford the luxury of insisting on procurement locally,” he said.
Chinamasa said the few countries willing to offer Zimbabwe money had models limiting the procurement and purchase of equipment to their home companies.
“The thing is, the model for China, India… is basically to say if you are borrowing money they supply the equipment and their companies will do the construction,” he said, adding that “they (lenders) will not give you money for a company somewhere else to do the work”.
Chinamasa said the only lenders that encouraged transparent processes are Bretton Woods Institutions that at the moment, are not entertaining Zimbabwe due to its huge debt.
“Only if we got a loan from the World Bank can we put it up for open tender and it is then and only then that the pricing and tender process be competitive and open,” he said.
Currently, the World Bank and International Monetary Fund (IMF) have refused to lend Zimbabwe until it clears its debt arrears.
In March, the IMF said the hard pressed southern African nation must engage its creditors to arrest economic collapse.
The country, saddled by a debt of approximately $10 billion, is struggling to secure international lines of credit and external budgetary support.
“It will be necessary to engage with the country’s creditors to work towards a solution to the long-standing debt arrears problem,” the IMF said.
Economic analysts have also warned that Zimbabwe’s foreign and domestic debt will continue to undermine the country’s creditworthiness and compromise its ability to secure new funding.
This comes as the country — which adopted the IMF’s recommended staff monitoring programme in June last year, to help it clear external debts and give it access to new credit from international lenders — has indicated it will make a “token payment” to the international money lender to reduce its debts.
“We’ve entered into a payment plan,” Chinamasa has said.
“It’s a token payment because we don’t have the capacity right now to service the debt.”
Zimbabwe’s economy is recovering from years of collapse, prompted by a political crisis that hit its currency and caused hyperinflation.