Zim not due for credit lines: Chinamasa

HARARE - Zimbabwe will not get funding from international lending institutions until it clears all its debts with creditors including the World Bank and the African Development Bank (AfDB), Finance minister Patrick Chinamasa has said.

There was hope in President Robert Mugabe’s cash-strapped government that lines of credit would now be opened after Zimbabwe cleared its overdue obligations to IMF, when it paid $107,9m after drawing down its special drawing rights (SDR) holdings kept at the fund.

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The payment unlocked the SDR $91,2m, which had been held in an escrow account pending the clearance of Zimbabwe’s arrears to the Poverty Reduction and Growth Trust (PRGT).

But responding to enquires by MPs during Parliament’s question and answer session yesterday, Chinamasa said notwithstanding the fact that the country cleared its debt, lines of credit are still not going to be coming through,  in line with the pari passu rule.

The rule states that all creditors are equal in all respects and should be paid back at the same pace or rate, in the same degree or proportion, or enjoying the same rights without bias or preference.

“No, we are not getting anything yet because the pari passu rule requires us to settle all the arrears with the AfDB and World Bank,” Chinamasa said in response to the opposition MDC shadow Finance minister Tapiwa Mashakada.

Zimbabwe, which has been in arrears since 2001, used its allocation of SDRs allocated to all IMF member states in 2009 as part of a global financial rescue package to clear the outstanding amount.

After the settling of the PRGT arrears using SDRs, Zimbabwe now has a balance of SDR 80, 4 million (about $110 million) in SDR holdings.

The IMF wants Zimbabwe to continue implementing reforms and to clear its arrears with other multilateral lenders in order to access new loans.

The country badly needs new capital and investment to starve off a recession.

Meanwhile Chinamasa called on government to be consistent in its policy pronunciations to build confidence in the financial services sector with the impending introduction of bond notes to ease cash shortages.

“’We are not introducing bond notes to build confidence. Confidence is built by several other issues such as clarity on policies and avoiding inconsistencies.

“The bond notes are meant to incentivise exporters so that we can build the country’s foreign currency reserves,” he said.

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