Mugabe stumbling block to Zim revival

HARARE - As Finance minister Patrick Chinamasa runs around to secure $1,8 billion to clear the country’s arrears to multi-lateral lenders, most experts have remained sceptical, arguing Zimbabwe’s problems can only end with leadership change.

In an effort that has been described as futile by most, the treasury chief has extended the country’s begging bowl to several lenders, only to realise his is a thankless job.

Chinamasa — who was recently in London with central bank governor John Magudya to drum-up foreign direct investment support for Zimbabwe’s dying economy — has said the country is set to access close to $1 billion loans from the African Export-Import Bank (Afreximbank) aimed at clearing the country’s $1,8 billion arrears to multi-lateral institutions.

However, some quarters believe that the arrangement will only serve to window-dress the books and not address the country’s main problem.

National Assembly speaker, Jacob Mudenda, recently became the first government official to publicly rubbish the treasury chief’s efforts saying Chinamasa is failing to lead the country through “sensible” investments.

Mudenda told delegates at the recently-ended Zimbabwe National Chamber of Commerce (ZNCC) annual congress that Chinamasa’s move to pay $1,8 billion towards arrears to the International Monetary Fund (IMF), World Bank (WB) and African Development Bank (AfDB) through a debt novation strategy was not the best route the country could have adopted.

“…if we take that $1,8 billion and buy more gold, we will have our gold bank, that money will create for us not less than $4 billion from which we can then start paying the interest we owe,” Mudenda said.

The candid Mudenda even suggested that the IMF suspend Zimbabwe for a period, until the country managed to get its house in order.

“Our gentlemen from the IMF, why don’t you give us a holiday of six months?

“When the...minister manages to raise the $1,8 billion and figure out what is going on, we will then come,” he said.

Mudenda’s utterances come as an IMF source recently said Zimbabwe was not going to receive a drop in funding from the international lender until the country’s 92-year-old President, Robert Mugabe, leaves office.

“It is quite simple, what the country desperately needs is a new face… new leadership and stewardship.

“The current debt overhang was accrued under the present leadership, in your right mind would you lend to the same person who racked so much debt?” the source said.

IMF head of mission to Zimbabwe Domenico Fanizza also told our sister paper the Daily News that the institution was open to any leadership the people of Zimbabwe selected.

“Let me say this very clearly, the re-engagement process with the IMF should be accepted by everybody. I do not think there are too many alternatives.

“This process should proceed no matter what happens in politics. And I hope so,” Fanizza said on a recent visit to the country to review Zimbabwe’s IMF Staff Monitored Programme.

Economic analysts say Zimbabwe’s foreign and domestic debt, currently hovering over $10 billion,  has undermined the country’s creditworthiness and compromised its ability to secure new funding due to the fact that most of it is now in arrears.

Chinamasa last year proposed an arrears repayment plan at the IMF/WB annual meetings in Lima, Peru where consensus was reached with creditors on a repayment strategy which entailed the clearance of the country’s $1,8 billion arrears by September 2016.

Presently, multi-lateral financial institutions are barred by law from extending loans to Zimbabwe because of its outstanding debts and clearance of the arrears is anticipated to pave way for lines of new capital.

Zimbabwe owes the IMF $124 million in arrears accrued since 2000, another $600 000 is owed to the AfDB while an additional $1 billion is characterised WB debt.

To honour these arrears, Zimbabwe is borrowing from the Afrexim Bank in Egypt for clearance of AfDB debt while drawing rights of about $130 million to the IMF will be used to pay off the IMF arrears as WB debt was financed through a loan capital facility.

But Mudenda said the novation route was going to plunge the country into more debt.

“Instead, why not just buy gold and self-finance the interest payments? Not only will we guarantee ourselves a way of making more money. It will also bring in some much-needed cash in the country,” he said.

A long-time ally of Mugabe, Chinamasa said some of the money would be put into agriculture, which has been starved of funds.

Zimbabwe collapsed into economic chaos after Mugabe implemented a controversial land reform programme around 2000, which led to the seizure of white-owned commercial farms.

The land grabs, human rights abuses and violent, disputed elections saw western nations cut off aid to Zimbabwe and impose sanctions on the nonagenarian leader and other members of his ruling Zanu PF party.

But now western diplomats are seeking to avert a deepening economic crisis, amid concerns about what could happen when Mugabe dies or leaves office.

Zimbabwe’s economy is slowing down due to lack of foreign investment, electricity shortages and expensive loans.

Cheaper imports are damaging an already strained local industry.

This has seen the government failing to meet its monthly obligations, a situation that has fuelled a series of rare protests, as well as a strike by teachers, doctors and nurses over unpaid salaries

Chinamasa said Washington had become more sympathetic to the idea of a rapprochement with Zimbabwe, although an American official said the US remained opposed to a deal with the IMF.

Comments (6)

I have been harrased n still being harrased by so called CIOs,whether fakes ,real or party fudgets ,my simple question is ,Why is president mugabe reluctant to deal wth 2 issues,Corruption n succesion.Why ?What good reasn can he give so that we can understand him on this stance.Can he give an analsis n account for all the tenders?Simple questions.

viola gwena - 24 July 2016

Viola I can help you understand why Bob is quiet or looks the other side when there is corruption left right centre up and down!! He is corrupt himself, corrupt to the core, he and his bitch let alone his mafios gang. I hope this simple response gets you to understand how this senile president has no OPTION but to partake in corrupt activities, so he cannot investigate himself

garikayi - 24 July 2016

Your dreams are long dead &historical GUD BYE ROBIE take yo smelling mouth&face somewhere else

Mugabereka - 24 July 2016

The Zimbabwe economy will never recover without meaningful political reforms first!

Wilbert Mukori - 24 July 2016

The only thing that will save Zimbabwe is a leadership change. Mugabe has messed up to a point where no one who is in their right mind cannot extend credit to the country. I just hope they do not give Chinamasa a dime wherever he goes. This government is the author of all the country's problems. How can they surely be the ones to get us out? No way

Godlwayo Omnyama - 25 July 2016

A relatively simple solution to the economic woes of Zimbabwe would be the honourable paying back of monies stolen over the last 30 years by the ruling party and its head. Pay back the money!

martin - 25 July 2016

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