HomeLocalGovt Secures Rescue Package

Govt Secures Rescue Package

THE troubled inclusive government yesterday secured substantial rescue packages from African banks and donors which should restore some stability in the financial system and brighten prospects of recovery in the battered economy.

The bailouts came after Finance minister Tendai Biti held critical meetings with the African Import and Export Bank (Afrexim) and the PTA Bank, officials in Harare said yesterday.

Afrexim gave Zimbabwe a US$250 million facility, while the PTA Bank extended US$185 million.

Added to the US$400 million secured from Sadc and Comesa recently and amounts from Britain, Germany and the Scandinavian countries, Zimbabwe has been able to mobilise close to US$1 billion – the equivalent of its 2009 budget – in three months. Revenue collections have also been slightly improving, from US$4 million in January, to US$13 million in February, US$37 million in March and US$54 million in April.

A total sum of local revenues and donations might save the struggling coalition government from the blushes of having its first 100 days performance – which elapse  on May 23 – generally rated between poor and mediocre.

Nothing much for ordinary people has changed since the new government came in on February 13, although economic and social conditions might improve if donors chip in with significant aid. 

Biti met with donors yesterday as they pushed to establish the Multi- Donor Trust Fund to marshal resources under the Humanitarian Aid-Plus initiative. The fund will be managed by the World Bank, African Development Bank and United Nations Development Programme (UNDP).

The three institutions are liaising with the International Monetary Fund (IMF) which has said it would not be able to give Harare money any time soon due to unpaid arrears and financial restrictions imposed on it.

After visits to Washington and London last week, Biti said Western sanctions must be removed to ensure economic recovery. Zimbabwe is also engaging with the European Union under Article 8 of the Cotonou Agreement to lift financial sanctions imposed via Article 96.

Government also got a confidence boost after former South African President Nelson Mandela’s Global Elders Group yesterday wrote to development ministers of 18 donor countries and the European Commission, urging them to respond more “swiftly, generously and creatively” to Zimbabwe’s needs by providing “Humanitarian-Plus” assistance.

Humanitarian-Plus is the term used for aid that is not limited to humanitarian needs but which does not extend as far as development aid.

The “like-minded” donors have been meeting on Zimbabwe over the past few years, but first held a critical meeting in Harare in October last year after the signing of the political agreement which led to the coalition government. A series of further gatherings set out parameters for the principles and processes of re-engaging Zimbabwe, a broad economic recovery plan and  aid architecture.         

Donors are willing to pour in more funding, especially if the government makes progress with political and economic reforms. The donors are demanding the restoration of the rule of law, respect for property rights, upholding of human rights, a rollout of credible democratic reforms and macro-economic stabilisation before giving money to government. 

Government yesterday secured close to US$500 million in credit from two regional lenders in its bid to revive the ravaged economy.

Biti told journalists in Harare at a joint press conference with the African Import and Export Bank (Afrexim) and the PTA Bank that government has been offered a lifeline by the two institutions.

Afrexim president Jean-Louis Ekra said his institution had offered a US$250 million line of credit to government through an ongoing facility to support the cash-strapped tobacco, gold and financial sectors.

Apart from the US$250 million from Afrexim, Zimbabwe will also get US$185 million from the PTA Bank.

Afrexim, according to Biti, also agreed to facilitate the establishment of a diaspora bond, which is earmarked for July. It will guarantee the undisclosed bond, which seeks to tap onto funds from the over three million Zimbabweans estimated to be living outside the country.

“The future will involve the bank committing to provide lines of credit to the tune of $250 million that will be used to support … the gold and tobacco sectors as well as provide liquidity for banks and grain imports,” Biti told reporters after meeting Afrexim officials in Harare.

“The bank has also agreed to work with us to facilitate a diaspora bond, which will be open to Zimbabweans living abroad and other investors. We can’t give you the (issue) figure. It’s a matter we are still discussing with the bank, but the bond should be floated by July 1.”

Biti said Afrexim would also help government in “rationalising” public enterprises and public assets.
“Zimbabwe has been comatose for the past five to 10 years. I hope you are going to walk with us through our recovery,” he said.

PTA Bank president Michael Gondwe said local companies with a regional influence were more likely to benefit from this facility.

Biti said the funds would be facilitated by a committee of banks and Ministry of Finance officials.

“There are some Western colleagues who still have bones to chew with us, and we understand that,” Biti said. “We welcome African institutions that want to help us.”  


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