UK rules out financing Zim

HARARE - The United Kingdom (UK) has ruled out any involvement in a fresh bailout for Zimbabwe after suggestions that a mechanism backed by a high-ranking advisor to the British government could provide bridge financing for Harare.

UK’s Harare Embassy spokesperson, John Culley, yesterday quashed reports that former British minister, Peter Mandelson— chairman of Lazard International, a division of United States investment bank, Lazard, had suggested to Foreign Secretary, Boris Johnson, that Zimbabwe needs “encouragement, debt restructuring, and an injection of additional liquidity” to enable a smooth transition of power.

Culley told the Daily News that UK maintains its stance not to bail out President Robert Mugabe’s hard-pressed government.

“The short answer is no,” he said.

“We have been consistent and clear that we will not be providing any form of financial assistance to the government of Zimbabwe or organise a ‘bailout’,” Culley said.

Instead, he said “the UK is in support of Zimbabwe’s efforts to implement economic and political reforms committed to at Lima in 2015.”

The Lima plan — consummated in Peru last October — committed Harare to amortising its $1,8 billion arrears to international financiers for it to access fresh African Development Bank (AfDB) bridge funding before the end of 2016.

While the UK has backed the plan, it has expressed concern over continuing rights abuses at the hands of Mugabe’s regime, warning that if the current political unrest and crackdown continues, the deal would be off.

Last month, Zimbabwe paid $107,9 million to clear its IMF debt, after accessing its special drawing rights holdings held by the Bretton Woods institution over the past seven years, enabling government to clear its arrears to the fund’s Poverty Reduction and Growth Trust.

Subsequently, government was granted access to $91,2 million, held in an escrow account pending the settlement.

Besides the almost $110 million previously owed to the IMF, Zimbabwe also owes $1,1 billion to the World Bank and $601 million to the AfDB.

IMF suspended Zimbabwe’s voting rights in 2003 over policy differences with Mugabe’s government and payment arrears to the global lender.

The rights were restored in 2010, allowing the nation to participate in IMF decision-making again.

Culley said a couple of things must be put in place before fresh funding to Zimbabwe.

“Only once arrears have been paid off and a track record of reform is established, will Zimbabwe be eligible to secure new funds from the international financial institutions to support delivery of the reform process and to boost investment in vital infrastructure and human capital,” he said.

“These new funds will only become available if the shareholders of the international financial institutions agree.”

London has been at the forefront of powerful Western countries withholding financial aid to Harare as punishment over Mugabe’s policies, but has been generous with humanitarian aid.

This has hit the fragile economy hard, causing it fall into a painful recession this year.

Amid a torrent of rhetoric from London, Mugabe — Africa’s oldest leader who has held power since independence in 1980 — has protested that the former colonial power still treats Zimbabwe as its protectorate and seeks to maintain influence in the mineral-rich country.

This comes as government is grappling with a deepening cash crunch, forcing it to promulgate emergency measures on Monday to introduce bond notes, a surrogate currency that will trade at par with the US dollar, in a futile bid to ease a worsening liquidity crunch that has heightened panic in the domestic economy.

Culley said Zimbabwe needs fundamental reform of the economy, of public finances and expenditure, implement human rights and the new Constitution adopted in 2013 and protect the most vulnerable.

“It will all take time and require difficult decisions,” he said.

He also rejected claims that the UK is planning for a Zimbabwe transition phase.

“It is not our role to get involved in the discussions about who leads Zimbabwe,” he said.

“The most important thing the international community can do is set out a path to normal relations between Zimbabwe and the international community and do all we can to encourage Zimbabwe to follow it,” Culley said.

Comments (9)

Yes and we are working on all these issues ambassador.Our economic minister has covered seriouse ground frm whr we where 5 yrs ago.Debts are being paid, which yu confirm.We are working on treaming government expenditure, graft being the biggest contributor.Farming is starting to get finance .We shure will deal wth every little problem hindering our progression.As we work towards this ,elections 2018,which we dont have the finances,will have to be shelved and have one government out of the 2 main political parties.This will speed up these reforms yu advice us.Lastly our relations dating back to colonial days ,must be improved for our joint citizens,the British and the Zimbabweans.We have one queen.Our wish is to improve our economy and a good life for our children.

viola gwena - 3 November 2016

Viola are you people[Lacoste] advocating for a return to Commonwealth?Is this the position or its your personal opinion.It would be great if Zim returns and re engage UK on all fronts though.

mcmillan - 3 November 2016

"Besides the almost $110 million previously owed to the IMF, Zimbabwe also owes $1,1 billion to the World Bank and $601 million to the AfDB."......to imagine this is peanuts compared to the$15billion looted by Zanu PF thugs and their Chinese handlers.

XG - 3 November 2016

Kasukuwere's mansion alone can pay the $1.1 billion owed to the world bank, Patrick Zhuwawo's BMW hybrid can clear the AfDB $601 million (less about $200milion).......we add these together, we can clear all the debt and remain with a healthy positive budget. Not to start on the $15 billion again.

XG - 3 November 2016

@viola why ever trust the Brits again? Look what they did to Libya and Iraq. Surely by now you must realize that these guys have the most inconsistent foreign policies in the world...and they are such liars too. Just take the time to read the Chilcot report. You can never trust a Brit because they are neither reliable nor dependable and have made so many enemies. Leave them alone, @viola, we don't need them, the Russians are much more dependable?

Mbewa - 3 November 2016

@macmillan,Mbewa. Yes we want a return to commonwealth and re engage every one else in the Commonwealth,for our economy , thru sports,farming qotas and principles.There is no honour in habouring worthles pride .We have failed to recover enonomicaly since deserting the commonwealth.There was promises from SADC and AU to assist us break away financially from Commonwealth,bt to this day not a coin.We actually had to give AU cattle for their survival.So why not retreat ourselves n go back to old friends to prosper.Mbewa in any case we need a referendum to idealy get out of Commonwealth.There never was one.Its the pples choice .VP is going to engage all our lost friends to help our economy to grow.Its the economy Mbewa.Not pride based on qasi socio principles.We make decisions based on facts on the ground.Why is it that nearly all SADC members are still in Commonwealth.

viola gwena - 3 November 2016

@mbewa. But I will read the Chilcot report .Right now our country needs growth bsed on economy for our pple.We have to do away wth pride.Its unproductive.It brings nothing to our economy revival.Remember this decision to pull out of Commonwealth was not a cabinet decision but J Moyo s doing .It was an act for politics not economy.

viola gwena - 3 November 2016

@viola the Brits have a disgusting track record going right back to the days of Cecil John Rhodes. Their businessmen are some of the most brutally ruthless people on this earth? Whatever they might give I can assure you that they will take 20 times more and strip our resources clean with absolutely zero concern about the people. No, sorry, I cannot and never will trust those Brits. Germans, Dutch are a different story - I would far rather deal with them. Look how they have helped Namibia? We are stupid fools if we seek assistance from them because they all still have Rhodes' genes in them and will rip us off.

Mbewa - 3 November 2016

@Mbewa. Yes I agree the colonial history of the British is not tha great .But we attained independene 36 yrs ago ,we broke away that time and tday if yu ask any one of our citizens ,quality of life has badly deteriorated.Its not the British.Its us.Our approach to self rule lacked seriouseness and objectivity.We are nearly a failed state.Life way too bad for our citizens.Now we seek to reload those relationships that we trumpled on in ignorance or in pursuit of vindictiveness.Our goal being production.There is seriouse business in Commonwealth and EU for us to ignore.Africa does not have those markets .We need trade wth the dollarman of this modern world.This is not selling ourselves .Its marketing.But we have 1st to rid the country of graft,thefts .Yu havent seen anything yet from Vp.All those sitting on land no production ,out.Off that land ,make way for production.

viola gwena - 4 November 2016

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