Govt rejects securitising minerals for loans

via Govt rejects securitising minerals for loans | The Herald 4 July, 2014 by Tendai Mugabe

Government has rejected calls by investors to securitise foreign loans using the country’s minerals because it is tantamount to giving away national wealth. The calls come in view of falling revenue inflows and Government’s mulling of some painful decisions to deal with a huge wage bill which takes up to 78 percent of every dollar reaching its coffers.

Addressing students at the National Defence College in Harare on Wednesday, Finance Minister Patrick Chinamasa, said leveraging loans using mineral wealth could only be considered after ascertaining the value of minerals by way of exploration.

He urged investors to explore other funding models that did not insist on sovereign guarantees.

“A lot of interest has been expressed by potential financiers, including those from the West and the USA,” he said. “With respect to leveraging our mineral resources, some of them are making propositions which I have said ‘no’ to. They want sovereign guarantees that basically give them a whole mountain or the whole Great Dyke and I have said ‘no’.

“I cannot make any guarantees that mortgage a whole mountain range of minerals, which I do not know what reserves it has under it.”

Minister Chinamasa said although Zimbabwe was in need of investment, Government did not want to engage in some dubious projects that prejudiced the nation.

He said Government was interested in sustainable investment that benefited current and future generations.

“We must have value for money,” he said. “If they are loans at the end of the day, we must still insist that we have value for money, otherwise we then burden future generations with paying loans where there was no value translated to the country.”

Minister Chinamasa emphasised that efforts were being made to create conducive business environment, especially policy clarity.

In this regard, Minister Chinamasa said, Government was synchronising certain policies and reviewing the joint venture policy to give it legal force to avoid uncertainties in processing projects.

He said it was important for Zimbabwe to re-join the global economy and that engagements were already under way with the European Union.

He said the EU indicated that sanctions would be lifted in their totality on November 1 this year and as such, the Government was looking at working with the bloc in a new dispensation.

“On the promise that sanctions will be lifted on the 1st of November, we have started negotiations on a development assistance programme initially of 234 million targeted towards health, agriculture, governance and institutional support,” he said.

Minister Chinamasa said Denmark had chipped in with US$20 million towards the Zimbabwe Fund projects administered by Africa Development Bank.

He said the European Investment Bank had committed itself to assisting small to medium enterprises.

Minister Chinamasa said they had assured other multi-lateral institutions such as the International Monetary Fund that they would deal with the country’s wage bill, among other issues, to enable the country to access new money.

“Our wage bill is too high, he said. As you know, the wage bill is 78 percent of every dollar we collect. So, there is no money for operations. There is no money for capital operations.”

Minister Chinamasa said the challenges faced were surmountable if people worked together towards implementation of Zim-Asset.