via Afreximbank to bail out ZANU PF | SW Radio Africa by Nomalanga Moyo December 20, 2013
The government has turned to continental lender the Africa Import-Export Bank for a $100 million loan which will be used to prop up indigenous banks.
Over the past weeks, skirmishes have erupted at local banks such as the Allied and Met Banks, who are struggling to provide depositors with cash.
The loan, which will be administered by the central bank, will act as an interbank market in which local banks can borrow and trade with each other.
“This is a necessary to build confidence within and amongst the local financial institutions, that way overcoming the liquidity problem,” Finance Minister Patrick Chinamasa said during his $4.1 billion budget statement Thursday.
Some analysts however say a budget that hinges on both domestic and external borrowing is unsustainable in the loan term.
“As long as there is no production or meaningful effort at reviving production, the government will find itself being saddled with more and more debt,” economic analyst Masimba Kuchera said.
Mining is the only productive sector at the moment. However, very little of the revenue generated in this sector makes it into Treasury, with billions of dollars disappearing into the pockets of ZANU PF bigwigs.
“Chinamasa has now centralised gold sales with state-owned Fidelity Printers now being the sole buyer of unprocessed gold. There is nothing wrong with this except that Fidelity may buy the gold at below the market value for onward sale at extortionate prices, as some state enterprises such as the Grain Marketing Board have been doing.
“Also, there are indications that Fidelity will be licensing a few other buyers and this is where we are likely to see corruption with those in power being awarded licences,” Kuchera said.
Kuchera said Chinamasa’s budget was a wish list that will be difficult to finance unless the ZANU PF government realises that it needs to make friends with western countries who can help kick-start the economy.
Chinamasa admitted the economy was “saddled with severe socio-economic problems” including a fragile treasury, erratic power supplies and lack of clarity over the country’s indigenisation laws.
According to former Finance Minister Simba Makoni the budget reflected the realities in the country but lacked any policy direction about how these will be addressed.
“The numbers in the budget reflect those that were announced last year, including the recurrent expenditure figures which still stand just above 70%. People were looking for some relief but there was nothing of that sort,” Makoni said.
Although Chinamasa recognised the structural changes that must be addressed to generate confidence in the economy, Makoni said the constraining nature of ZANU PF politics will not allow these to be implemented.
“He talked about curbing consumption, yet we know that his government is the guilty party here through unnecessary purchases of luxury vehicles, endless foreign trips among others.”
Makoni dismissed Chinamasa’s 6.1% growth projections saying the minister failed to explain where this growth will come, given the reluctance by the government to address issues that were scaring away investors.
“The minister was just dropping unsubstantiated figures. Going into the new year, Zimbabweans should brace themselves for more hardships, as there is not much in this budget to look forward to,” Makoni said.