Government pleads for Beijing’s private sector support

12 Sep, 2014 - 15:09 0 Views
Government pleads for Beijing’s private sector support

The Sunday Mail

GOVERNMENT and China are presently working on a framework through which local private companies will be able to access lines of credit from Chinese financial institutions.

Finance and Economic Development Minister Mr Patrick Chinamasa said during The Herald Business breakfast meeting on Thursday Government had secured commitments from Chinese financial institutions to extend lines of credit to the financial sector.

“We also entered into agreement with China Exim Bank and in my discussion with Sino-Sure we agreed to work on a framework, which will make it possible for private sector players in Zimbabwe to access loans from state and non-state financial institutions in China,”

said Minister Chinamasa.

The financial institutions include Sino-Sure, China Exim Bank, Industrial and Commercial Bank of China and Development Bank of China.

Most multilateral financial institutions such as the World Bank and the International Monetary Fund are reluctant to extend financial support to Zimbabwe owing to the country’s perceived creditworthiness.

The country’s external debt presently stands at US$8,8 billion.

Zimbabwe owes various bilateral creditors including the Paris Club and Non-Paris Club and multilateral creditors such as the African Development Bank (AfDB), the World Bank (WB), the International Monetary Fund (IMF) and the European Investment Bank (EIB) among others.

According to Treasury, total external debt to multilateral creditors stood at US$3,786 billion owed to Paris Club creditors and Non-Paris club, including China.

Total multilateral debt stood at $2, 58 billion, owed to the World Bank ($1 billion), AfDB ($612 million), EIB ($280 million) and the IMF ($121 million).

Private sector external debt stood at $1,951 billion, constituting 22 percent of total external debt.

Government has however since committed to reduce the country’s debt to International Financial institutions (IFIs).

In cases where the private sector has sought external lines of credit, the interest rates have been punitive.

Mr Chinamasa also noted that the country was struggling to access Chinese funding due to its failure to service its loans.

Industrial lobby group Confederation of Zimbabwe Industries (CZI) says industry needs at least US$8 billion as working capital of which US$5 billion will be earmarked for replacement of obsolete equipment.

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