Repay US$1,5bn, China tells Zim

via Repay US$1,5bn, China tells Zim – The Zimbabwe Independent July 31, 2015

NEW details are emerging from Vice-President Emmerson Mnangagwa’s recent trip to China amid revelations the Chinese will not give Zimbabwe the much-needed financial bailout unless it provides a payment plan for loans totalling US$1,5 billion accessed from the Asian economic giant over the past few years.

Elias Mambo

It has emerged that part of the reason for Mnangagwa’s visit to Beijing between July 5 and 10 was to seek an emergency rescue package for the country, which is facing a severe liquidity crunch.
During his visit Mnangagwa met several officials from the Communist Party of China (CPC), including Vice-President Li Yuanchao, in need of help.

Government has failed to implement its ambitious economic blue-print, ZimAsset, which it claims is the panacea to the country’s economic woes, partly because of lack of funds.

ZimAsset, which among other things promises to create 2,2 million jobs in the five-year period between 2013 and 2018, requires US$27 billion funding for implementation.

China, which has told Harare that it does not provide budgetary support, has provided Zimbabwe with over US$1 billion in concessionary and preferential loans. It has also given Zimbabwe US$100 million in grants and interest-free loans.

Mnangagwa reportedly pleaded with the Chinese to assist with funds, but just like President Robert Mugabe who visited the country in August last year, came back empty-handed.

The loans the Chinese are concerned about include the US$150m given to the Civil Aviation Authority of Zimbabwe in 2013, US$200m loan used to procure farming equipment (2011), a US$51m extended to the Grain Marketing Board (2012) and US$70m advanced to the Central Intelligence Organisation.

China also extended a US$36m loan to Zimbabwe after then vice-president Joice Mujuru approached the Chinese in 2013. Recently, Zimbabwe received digitalisation equipment worth US$3m as it futilely sought to beat the June 17 International Telecommunication Union’s deadline to migrate from analogue to digital broadcasting and US$218m for NetOne expansion.

Sources who accompanied Mnangagwa said the Chinese kept questioning Zimbabwe’s capacity to repay the loans since it had already defaulted on other loans.

Sinosure, an insurance company which guarantees all government-to-government loans involving the Chinese, was also reportedly refusing to guarantee further loans to Zimbabwe.

“Sinosure, an insurance company, is refusing to guarantee more loans from Chinese banks to Zimbabwean companies because of the government’s failure to repay arrears,” said a source adding: “In fact, Sinosure had closed its doors to Zimbabwe, but the Vice-President asked for a second chance and promised to make a follow-up on the outstanding loans.”

Mnangagwa assured the Chinese that he would personally be involved in following up on the outstanding loans, the source said.
The Chinese also expressed concern over the way Zimbabwe structured its deals before dispatching a team of experts from the International Co-operation Centre and National Development and Reform Commission of China to train Zimbabweans in areas such as structuring projects into bankable projects, establishment and management of special economic zones.

Chinese experts have also been deployed to Mugabe’s office.
During his visit, the straight-talking Chinese leaders also gave Mnangagwa a sobering reality check by raising several critical issues that Mugabe and his government usually feel uncomfortable dealing with.

Diplomats who followed Mnangagwa’s visit and officials who were part of the delegation to Beijing said the Chinese mandarins raised fears about Mugabe’s age, Zanu PF leadership renewal, Zimbabwe’s investment climate and ease of doing business, the country’s relations with Western countries, political risk, government’s failure to tackle corruption and bureaucratic red tape, among other thorny issues.