Zim plans new debt financing strategy

HARARE - Zimbabwe is working on a new debt financing programme aimed at clearing the country’s $10 billion debt using local resources, Finance minister Patrick Chinamasa has said.

Chinamasa, whose tenure at Treasury has transformed him from a hawkish member of President Robert Mugabe’s Cabinet to a sharp-elbowed reformer, told reporters on Friday that the country needs to revive its economy for the strategy to work.

“We need to restore our economy to a level where it can pay its debts,” he said adding that the country was struggling to service its debts.

Zimbabwe, which stopped servicing its loans in the late 1990s as its economic woes mounted, has been unable to access fresh loans from global lenders since then due to worsening economic conditions.

However, in October the country agreed to a debt plan which will see $1,8 billion in arrears owed to the World Bank, the International Monetary Fund (IMF) and African Development Bank (AfDB) cleared by mid-2016.

Chinamasa believes that after clearing its arrears Zimbabwe will then present its new financing programme to the multilateral lender for approval.

“Between now and November, we are going to work feverishly to come up with a new financing programme on the basis of which we hope, if we clear our arrears…we should get new financing to support those sectors of our economy which we think — if supported — can have a transformative impact on our economic recovery,” he said.

“This country’s financing programme will be able to finance those sectors in order for them to grow and build the country’s capacity to pay its debts both past and current,” he added.

Market experts say Zimbabwe’s plan to clear its arrears would help improve the country’s risk profile and might help in attracting foreign direct investors.

Zimbabwe has fallen behind regional peers, Botswana, Mozambique and Zambia, in terms of foreign direct investment flows.

The country’s foreign direct investment inflows amounted to $1,7 billion over the period 1980 to 2013, while Mozambique and Zambia received $15,8 billion and $7,7 billion — according to figures from the United Nations Conference for Trade and Development.

Zimbabwe’s low foreign direct investment inflows have been blamed on policies such as the seizure of white-owned farms to resettle landless blacks from the year 2000, and the current drive by Mugabe’s government to force foreign-owned businesses to cede 51 percent shareholding to local blacks.

The World Bank says Zimbabwe’s economy will grow by 1,5 percent in 2016 as the country’s outlook remains difficult on the back of adverse  weather conditions and depressed commodity prices.

    Comments (1)

    patrek chinamasa continues to labour without necessity! how can he scamper for $1.8b to service a $10b debt when $15b had just vanished in thin air? zimbabwe, why us??!

    SaManyika Chaiye - 25 April 2016

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