Friday, 1 July 2016

WE HAVE NOTHING, SAYS CHINAMASA



Finance Minister Patrick Chinamasa  says Zimbabwe has “literally nothing” as he begged for lines of credit in Paris.

"Right now we literally have nothing, so to speak. Our strategy is to achieve private-sector-driven growth in the areas of agriculture, manufacturing, tourism, mining and our biggest challenge at the moment is that we do not have sufficient lines of credit." Chinamasa told RFI.

He said he was desperately searching for credit.e talked to business leaders about investment opportunities to revive the country's struggling economy. He also met with financial lenders at the Paris Club to conclude a deal on repaying almost two billion dollars of arrears. 

If finalised, the debt deal would signal Zimbabwe's return to financial markets after almost two decades.

The agreement to repay some 1.86 billion dollars of arrears to lenders such as the IMF, World Bank and African Development Bank, has however been met with scepticism in Zimbabwe, currently gripped by economic hardship.

"I am of course looking for increased lines of credit," he told RFI. "We've had some French state enterprises who are in the financial sector giving support to our productive sectors through our commercial banks and I've come to solicit and also ask that those lines of credit are increased."

International finance may help President Robert Mugabe's government meet its obligations to the Zimbabwean people, not a negligeable consideration given that fresh elections are to take place in 2018.

But repaying the arrears to obtain further credit will require more potentially sensitive measures, including public-spending cuts. There is limited appetite for that right now especially as most salaries are not getting paid. Teachers, particularly in rural areas, have not been paid for weeks.

"I don't think we would qualify for any more loans," economist John Robertson reckons. "Zimbabwe needs to prove that it can handle more debt, but the fact that we are in arrears in the first place clearly proves that we can't manage the debt we already have."

Currently Zimbabwe owes 10 billion US dollars to the IMF, World Bank and the African Development Bank.

"But it's important to distinguish between public-sector debt, [eight billion] and private-sector debt [two billion]," Chinamasa asserts.

"The debt we are talking about clearing is eight billion from the public sector, so we can start enjoying the benefits of our membership from the three multilateral institutions."

Chinamasa said the private sector was key to his strategy.

"The two billion private-sector debt is being serviced and everyone acknowledges that there's been no problem with the private sector to service its debt," he inisisted. "For that reason, I would want to see more resources being poured into the private sector which is in a position to service any debt which it incurs, at an affordable rate."

Experts remain unconvinced that this will contribute to "kickstarting the country's economy", as the minister hopes.

"The deadline for the debt deal was 30 June, it's now been pushed back to September," Roberston insisted.









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