Zim seeks SA loans

via Zim seeks SA loans – DailyNews Live 27 September 2014

HARARE – Zimbabwe is seeking concessionary loans from South African development finance institutions.

Finance minister Patrick Chinamasa said South Africa would not benefit from charging Zimbabwe high interest rates on loans as it was probable that hard-pressed country would fail to pay back.

“Let me now speak from my heart, South Africa is our biggest trading partner and it is in South Africa’s best interests for it to help Zimbabwe to upgrade to the same level it is at,” he told delegates from the Development Bank of South Africa (DBSA), Industrial Development Corporation (IDC), Transnet and the Public Investment Corporation (IPC),

“Do not charge us rates above what you charge South African corporates, we are a country not yet developed, but after development,” he said, adding that  “the two countries had to work together to protect each other’s interests”.

“Honestly, our economic wellbeing is tied to that of South Africa so it is also South Africa’s responsibility to help Zimbabwe as much as it can to protect its economic interests,” the Treasury chief said.

This comes as the International Monetary Fund (IMF) has said Zimbabwe is not poor enough to deserve financial bailout under the Highly Indebted Poor Country (HIPC) facility.

Domenico Fanizza, the lender’s representative to Zimbabwe, said the southern African nation has “a lot of potential” and did not qualify for “destitute bailout money”.

“…it is (Zimbabwe) not even poor, it is merely a policy and management issue,” he told delegates at a breakfast meeting in Harare this week.

“Zimbabwe owes IMF $142 million and cannot benefit from the institution’s financial support because of these arrears. The country does not qualify for debt relief under Highly Indebted Poor Countries (HIPC) arrangement,” Fanizza said.

He said the IMF’s regulations stipulate that it cannot offer financial support to a country that owes other international financiers.

“Financial support is key to unlocking the potential,” Fanizza said.

“However, the country needs to work hard to change external perceptions and get this development assistance.”

According to economic experts, a country that qualifies for HIPC status is one whose debts are more than one-and-a-half times its exports.

It must also be on a World Bank or IMF programme for at least three years to qualify.

Speaking at the same occasion, Chinamasa said the country, saddled by a $10 billion debt, could take another route through working on debt rescheduling so that it gets access to new funding.

He said Zimbabwe must be grateful that the IMF had ruled out the HIPC route.

“We should be happy the IMF says we do not qualify for HIPC,” Chinamasa said. “What this simply means is that although psychologically we have convinced ourselves we are dying, we are not dying at all.”

To receive HIPC debt relief, Zimbabwe would need to qualify for the initiative, which largely depends on its levels of debt vis-à-vis exports based on the latest fiscal year data and on its policy performance.