Zim gets $23mln Chinese grant, eyes “comprehensive” rescue package

via Zim gets $23mln Chinese grant, eyes “comprehensive” rescue package | The Source February 11, 2014

Zimbabwe announced  a $23 million rural development grant from China on Tuesday and suggested the Asian economic powerhouse was considering a “comprehensive” financial rescue package for the troubled southern African country.

Zimbabwe cannot access funds from multilateral finance institutions and its traditional Western funders due to arrears and a breakdown in relations at the turn of the century, but requires about $27 billion to repair its decaying infrastructure and revive its ailing economy, which shrank by as much as 50 percent between 2000 and 2008.

Finance minister Patrick Chinamasa told journalists that the government had secured the funding commitment after his visit to China last month, adding that the package, whose details he did not provide, was likely to be concluded within three months.

“During the visit we agreed that while the government of the People’s Republic of China and the government of Zimbabwe are working towards the conclusion of a comprehensive financial package and committed ourselves to finalising the matter within the next three months, the Chinese Embassy in Harare will meanwhile remain at our disposal for other assistance programmes,” Chinamasa said at a signing ceremony at his Harare offices.

“The $23.3 million grant we are signing today is one such assistance that has been availed to us.”

The Chinese rescue package is expected to fund government’s five-year economic blueprint, the Zimbabwe Agenda for Sustainable Socio-economic Transformation (ZimAsset) which requires at least $27 billion to implement.

The $23 million grant will go towards various projects and programmes, which include construction and equipping of schools and hospitals, agriculture projects, borehole drilling and the supply of mobile solar units in rural areas.

“This grant will ensure that the newly resettled communities living on land acquired under the land reform programme have access to health facilities in their vicinity,” Chinamasa said.

The economy has considerably slowed down since 2013 and has stuttered since President Robert Mugabe’s ZANU-PF party assumed sole charge after winning the July 31 elections, ending a unity government with the opposition, which helped stabilize the economy since 2009.

The economy is seen growing by about 4.2 percent this year, according to the World Bank, slower than the government’s 6.2 percent projection due to a slowdown in key sectors of the economy. The Confederation of Zimbabwe Industries says industrial capacity utilisation is likely to drop lower than the 39 percent recorded last year.

But Chinese ambassador to Zimbabwe, Lin Lin speaking at the signing ceremony, expressed optimism that Zimbabwe would recover, buoyed by the strong relations between the two countries.

“We are also sure that economic and social recovery of Zimbabwe will be robust and sustainable,” said Lin.

He did not mention the rescue package.