Govt to push for fresh lines of credit

Govt to push for fresh lines of credit | The Herald March 11, 2016

FINANCE and Economic Development Minister Patrick Chinamasa says Government will seek to ensure Zimbabwe gets fresh lines of credit once the country clears its $1,8 billion arrears to preferred creditors. A debt clearance strategy has already been prepared and was presented to creditors at the IMF meeting in Lima, Peru last year with no objection from every single institution or country that is owed.The minister said this after holding a meeting with an International Monetary Fund team, in Zimbabwe for routine article IV consultations and review of the IMF staff monitored programme.

Zimbabwe’s strategy to secure fresh lines of credit from bilateral and multilateral lenders entails getting bridging finance from international financial institutions to clear its arrears to the International Monetary Fund, African Development Bank and World Bank.

Zimbabwe will get $819 bilateral loan from its central and North African friends to clear arrears with World Bank appendage, International Bank for Reconstruction and Development and also use IMF special drawing right to settle its $110 million arrears with the fund.

The country’s total external debts stands at a whopping $10,8 billion.

The Southern African country has not been able to access fresh lines of credit from the Bretton Woods institutions and other lenders, including the Paris Club, since it started defaulting on loans in 1999.

On Wednesday, Minister Chinamasa said he would seek audience with the IMF to synchronise arrears clearance and immediate access to fresh lines of credit into an economy seriously staved of liquidity.

Minister Chinamasa said that the first draft of the proposed country finance programme to be presented to the IMF has since been prepared, but would only be discussed and debated from next week.

“We are going to engage them very robustly over that issue so that there is a degree of synchronisation between clearance and receiving new financing to kick start economic recovery of our country.

“We have already finished the first draft of the country financing programme, but the document has not yet been debated among ourselves.

“But priorities should be power generation, revitalising agriculture, resuscitating manufacturing, resuscitating our mining sector, value addition and providing social protection to vulnerable groups. these are the key elements of what I expect to be in that document” he said.

Minister Chinamasa said Government would lobby vigorously all creditors, including the United States, to ensure total buy in and support for Zimbabwe’s debt clearance and country financing programme.

IMF mission chief Domenico Fanizza said the economic situation in Zimbabwe was not bright, pointing out that economic difficulties in the country had deepened due to drought, falling mineral prices on global markers and the loss in value of the South African rand.

He said much more work needed to be done to sustain economic growth post resumption of fresh lines of credit from international lenders.

“Under these conditions, Zimbabwe cannot wait. Zimbabwe needs to move forward with a comprehensive and ambitious economic transformation programme, that I understand the authorities are preparing. The objective of the programme (SMP) is to reverse the current trend and unleash Zimbabwe economic potential.”

Mr Fanizza said that the SMP had only been the preparatory phase for re-establishing normal relations between Zimbabwe and the IMF, but confirmed the country had met all benchmarks of the SMP.

Minister Chinamasa said Government would undertake profound macro-economic reforms, including resolving issues around bankability of 99 year leases, not only to fulfill conditions for fresh funding from IFI’s, but its own good in turning around the economy.