Skint Zimbabwe begs reviled IMF for help

via Skint Zimbabwe begs reviled IMF for help 10/11/2013 by Gilbert Nyambabvu NewZimbabwe

ZIMBABWE is making measly and largely token payments of just US$150,000 towards its reported US$11 billion, Finance Minister Patrick Chinamasa revealed last week as he appealed to Western creditors to show some sympathy – and lend the country even more.

Chinamasa, who has been forced to delay the 2014 budget announcement by a month, revealed the dire state of the country’s debt situation to legislators last week.

He warned creditors that, unless they helped with more cash, it would take hundreds of years for Zimbabwe clear its foreign obligations.

His appeal for help will surprise those who remember former mines minister Obert Mpofu’s 2012 boast that, with an estimated 25 percent of the world’s diamonds and projected annual revenues of up to $2 billion from the gems, Zimbabwe would never need to beg for aid again.

Begging however, is what Chinamasa is effectively doing with organisations such as the International Monetary Fund (IMF), a frequent target of attack by President Robert Mugabe and his Zanu PF party.

“When all is said and considered, we are under a staff monitored programme which means we are unable to access benefits of our membership for concessional borrowing,” Chinamasa said.

“Because they are not giving us those benefits, it means we remain at a standstill which is not good even for the creditors. A creditor who wants to be paid will certainly capacitate the debtor to build his capacity to pay back.

“Bankers will know it will take us a lifetime or more than a lifetime to clear those arrears.”

Commenting after industry watchdog, the Kimberly Process, cleared Zimbabwe’s diamonds in August 2012, Mpofu, said Zimbabwe could expect $2 billion per year from the Marange diamonds, meaning the country would never need to beg for aid.

“We were recently given certification by the KP (to export diamonds), but we have already shaken the world market both in terms of pro­duction and demand. Our gems are a force to reckon with,” said the upbeat minister.

The gem revenues would however, continue to be a source of bitter rows in the coalition government with the MDC-T party claiming the cash was being diverted from treasury while Zanu PF countered that economic sanctions were blocking the country from fully benefiting from its diamond wealth.

The European Union (EU) recently lifted sanctions on the Zimbabwe Mining Development Corporation (ZMDC) which represents government interests in the Marange diamond district.

Chinamasa said the development would help increase revenue from the diamond mining activities.

Even so, he urged the IMF and other multilateral lenders to be “flexible and to look at our situation as a unique one”.

“We are among the top five countries that are going to be targets for international capital inflows if we play our cards right. We need new money,” he said, in apparent reference to reports France may cancel the country’s debt.

The treasury chief admitted that the country was only able to make symbolic payments of US$150,000 on its external debt adding he felt the obligations were probably hugely overstated.

“We are currently verifying the size of our external debt. And we are doing so with the creditors, to agree on the figures as to what we owe, so that at least we know where we stand as a country,” he said.

“The media has been putting it at US$10,7 billion or US$11 billion, but it is much less. We are looking at around US$6 to US$7 billion.”

 

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