Zimbabwe seeks $10bn bailout

via Zimbabwe seeks $10bn bailout – Southern Eye by Gamma Muadarikiri 17 November 2013

ZIMBABWE is seeking $10 billion bailout from China to kick start the economy which is comatose following the re-election of President Robert Mugabe in July 31.

The country, whose economy is stagnant, desperately needs white knights to rescue the economy which is in a tail spin.

Southern Eye has it on good authority that the media in Zimbabwe — both private and public — are being encouraged by the Media, Information and Broadcasting Services ministry to portray the country as stable and an investment paradise, as the new administration battles to fulfil promises it dangled during the election campaign period — among them stabilising the economy, job creation and attracting investment.

Information obtained by Southern Eye yesterday indicated Finance minister Patrick Chinamasa was scheduled to visit China month end to seal a $10bn financial rescue package for Zimbabwe that Zanu PF believes will kick start the economy.

Although Chinamasa was not immediately available for comment yesterday, sources said the China $10bn rescue package was a done deal.

Zimbabwe has mortgaged its mineral resources particularly Chiadzwa Diamond fields as part of the deal to secure $10bn deal from China.

On Friday Chinamasa, Foreign Affairs minister Simbarashe Mbengegwi and Media, Information and Broadcasting Services minister Jonathan Moyo met regional and international diplomats as part of efforts to re-engage the international community to rescue the country. But sources said the China sojourn was deemed the panacea to the country’s economic quagmire.

China, the country’s all-weather friend, has become one of the country’s biggest trading partners after the government adopted the Look East policy.

Zimbabwe and the China Export and Import Bank last week signed a $319 million loan agreement for the expansion of Kariba South hydro-power project expected to go a long way in addressing the plethora of economic challenges besetting the country.

Under this arrangement, the bank will provide funding amounting to $319,5m — representing 90% of the total project cost, while the government, through the Zimbabwe Power Company will finance the 10% balance amounting to $35,4 million.

The project is expected to add 300 megawatts (MW) to the national grid, a development set to ease power outages which have largely been blamed for industry’s poor performance evidenced by closure of an estimated 711 companies nationwide this year.

Zimbabwe’s electricity generation capacity is estimated at 1 200MW against a peak demand of over 2 200MW and the country has been battling to attract foreign funding into the energy sector for long.

This has largely been due to ballooning external debt estimated at $11 billion, policy misalignments — chiefly the indigenisation law which calls for foreign companies to cede 51% of their shareholding to locals.

However, the government has of late been relaxing the implementation of the policy as the pressure to attract investment and salvage the ailing economy continues to mount.

 

COMMENTS

WORDPRESS: 23
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    Our grandchildrens legacy mortgaged to the colonial yellow devil masters. An international underworld mafia cabal. Methinks street uprisings inevitable

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    dzungu 8 years ago

    These thieves have no clue how economies work- now you asking China to lend you $10bln US $ ? What guarantees /assurances that the money will be paid back given Zim ‘s record in the last 33 yrs. Bear in mind Chinese finance guys will be looking @ the request in practically the same way as any financier just like IMF/World Bank would- in fact they may even consult analyst from the Breton Woods institutions & the answer is easy & straight forward- no brainier here.
    Until Zim put the country 1st and adopted clever and rational approaches to economic management- which has not happened in the last 33 years- we are going in one direction- BACKWARDS- with CDE RGM & & the never ending Pamberi ZANU!!!

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    Chinamasa, you must sign the deal after consulting the nation because one day you will not be there

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    ZanuPF is selling the future of the country to China and politically will be controlled there

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    Mr President do it. We also mortgage our houses to get loans. the nation needs a kick start and mortgaging whaever it means is is ok.

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    Mr Mixed Race 8 years ago

    What happens after we get this $10 billion? I presume this money will be used to pay our overdue debts,so we start from zero unless government borrows more money from our new friends China.The nation should be told what collateral is used for this bell out money.The Chinese are very stingy on their money as witnessed during international disasters eg Phillipines they have only donated $1.6 millions whilst countries like UK have donated $80 millions.These guys do not give money out without serious hidden conditions unless they get hold of our minerals ,farmlands,water systems and energy.

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      You do not have to pay your debts at one go, UK has £1,3 trillion pounds of debt, USA has $14 Trillion us dollars of debt,they all cannot pay it on one go, if China can give Zim money we as Citizens should be happy Chikomana.

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    Patriotic 8 years ago

    Lets ask ourselves these questions:
    1. What state was the country’s economy when we gained independence and ZANU PF took over power from the opressors in 1980?
    2. At what state was the economy 10 years after, 28 years after (2008?)
    3. At what state was the economy when the inclusive goverment took over (2008)
    4. And finally at what state was the country’s economy after the end of the inclusive government i.e this year 2013?

    Please Compare – and be truthfull – Economists can help here. Where are we going wrong? Lets work together to rebuild Zimbabwe.

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      My friend before 1980, most blacks hardly had a TV, or fridge, most people did not go to school, just like SouthAfrica now, most blacks are suffering in their own Country, 70% of the Land belongs to the whites how can that be fair, better we struggle whilst we have our own land, Education TVs , Fridges.

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    Mr Mixed Race 8 years ago

    Answer to your last question Mr Patriotic.What we are doing now brain storming is what will take us forward if everybody’s ideas are taken seriously by the authorities.Small ideas add up to something big if put together.To start with we should reduce corruption and looting then the silent majority will come out and help.We can do it because Nigeria has already started their reforms. This is why we have many Nigerians who decided to come to southern Africa where the chances are good for the corrupt because back at home Good Luck Jonathan is having zero tolerance on corruption.

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    aah ini zvangu ini saka kana zvongodzi teacher wil increase salary kana madiamonds atengwa ,doctor kana ma Diamonds ,chikwereti chenyika ,kana ma Diamonds atengwa ,ma Diamonds akawanika nezuro uno ,ko kare kese tichikura mari yaibva kupi yaibhadharwa vanhu ava? ende yakaendepi?

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    some some na Lobengula akatengesa nyika ichipiwa sugar,saka nyika iyi yatove yenyuka iyi?

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    Diego Zhaba 8 years ago

    If at all China comes to Zimbabwe’s request, let it be known guys, the county is gone. Ndiko kupinyoresa nyika ikoku. Yes we need new money but as long as our policies are driven by selfish needs, then Zimbabwe will go to the dogs. New money is readily available but who is willing to invest when the policies that promote anarchy, where risks outweigh the benefits – none is willing to put their money in the country. Investor confidence is blown off based on our policies.

    It’s the same policies that have seen all manufacturing industries crumbling. Where is ZISCO today, CSC, Lancshire Steel, Bata, Windmill Fertiliser etc? They have all been looted and who in their right frame of mind would want to bring in their investments to be looted? Common sense is not so common and has become a rare commodity among the ZANU guys. Get your act right and there will be an influx of investment in Zim.

    The current liquidity challenges are a clear indicator of a lot of problems simmering beneath the surface. Only time will tell.

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      Boss MyAss 8 years ago

      WHAT COUNTRY BRO ? THE COUNTRY IS SOLD AND WILL BE CALLED CHINAMBABWE.

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    wasu wemanyika 8 years ago

    we are sick and tired of mari dzemadiamonds ,mari dzemadiamonds imi muchidya muchiguta .Tinodya mashoko here isu ? Tinodya ZANU PF here ? We need action

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    Shebah 8 years ago

    The whole of last week you guys were asking, where are your Chinese friends. Now the 10 billion announcement you start another chorus. loan from China, Loan from America, loan from Europe is all loan and should be repaid. When in a weak position you are bound to give in more.

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    We definitely need a bailout , China is ready to do that , USA have donated much into the country ,nobody complained or negetively commented . Please what only matters mostly is how the money will be utilised , if the amount can be spent wisely then the whole nation will benefit , therefore we must stop jumping like confused squerrals all the time , let China assist us , its fine .

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    Even MDC T , should they have won the elections (if rigging did not happen), there is noway they should have survived without this kind of bailout , never mind where ever it comes from . So lets appreciate the assistance from China . ZANU PF must spend it wisely and provide service delivery to the communities .

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    Boss MyAss 8 years ago

    SHONA MY ASS, ENGLISH MY ASS AND SO ON AND SO FORTH. THOSE WE DON’ KNOW CHINESE WE ARE DOOMED. I WILL CHANGE MY NICK NAME TO BRUCE LEE MY ASS.

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    Hey guys, Im going to breed dogs for these slant eyed yellow dogeaters, and I will make a fortune…Dont tell China-massa-baiter as he may steal my idea!!!

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    hlongandlebe madzivanzira 8 years ago

    i dont think the problem is getting the money itself,the one major problem Zimbabwe does not service its debt,chete….if you develop a reputation of not paying your instalments no sane money lender will want to do business with you.

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    moses 8 years ago

    what a great move by the gvt. FOWARD EVER BACKWARDS NEVER.