Zimbabwe Needs Loans to Revive Economy, Finance Minister Says
Sebastian Mhofu
September 07, 2012
HARARE — Zimbabwe’s economy is growing but has yet to recover from the
catastrophic collapse it suffered in the decade prior to 2009. This week
the country’s finance minister said he will seek loans from neighboring
countries in hopes of meeting some urgent needs and getting the economy
moving at a higher gear.
Some say diamonds glitter, but that shine seems to be failing in Zimbabwe.
“I regret to advise that the economy remains depressed irrespective of the
prevailing stable macroeconomic environment and some output improvements in
such sectors as mining,” said Biti.
That is almost the norm for Zimbabwean Finance Minister Tendai Biti when he
opens his monthly addresses to journalists.
He mentions mining, which many thought would anchor Zimbabwe’s economy after
the collapse of the country’s once vibrant agriculture sector. Diamond
prices remain high on the world market and Zimbabwe has diamond fields
estimated to be bigger than the size of Wales in Britain.
But as Biti has noted in the past, little revenue from diamond sales reaches
the national treasury. He accuses President Robert Mugabe’s ZANU-PF party,
which controls the Marange diamond fields, of withholding diamond revenue in
preparation for future elections.
Independent economic analyst Paradzai Paradza, a former lecturer at the
University of Zimbabwe, says that move is holding back Zimbabwe’s recovery.
“It is actually a stand-alone case in the whole world because we have seen
diamonds are rejuvenating economic growth in some countries. We have Angola,
we have Botswana, we have countries like DRC who have transformed themselves
into vibrant economies through diamonds. But in the case of Zimbabwe, the
situation is not like that. I don’t think companies at Marange are not
remitting the proceeds. I think they are remitting the proceeds, but the
problem is who is getting the proceeds after they are remitted,” said
Paradza.
The news is not all gloom for Zimbabwe’s economy. Since the formation of a
power-sharing government in 2009, after a disputed election, the country has
registered annual growth of about 8 percent.
But because of the shortfall in revenue, Biti says, regional countries will
have to chip in to help his country through this year. He says Zimbabwe
needs $400 million to mitigate drought effects, to raise money for
by-elections and for a constitutional referendum, among other urgent needs.
Biti told reporters he has stepped up efforts to ensure that diamond revenue
reaches the treasury. He also plans to appeal to Zimbabwe’s neighbors in
the Southern African Development Community.
“The second thing that we are also doing is appealing to our colleagues in
the SADC countries,” he said. “I have just come from South Africa where I
secured an important appointment two weeks from now with the South African
minister of finance. In this meeting we are going to make a request for
budgetary support to the tune of $100 million from the South African
government.”
He says he wants the South African government to honor a pledge of a $60
million line of credit it made in 2009. From Pretoria he heads to Angola
asking for a $50 million line of credit. Earlier this week Botswana
extended a $70 million line of credit to Zimbabwe to revive its ailing
industries.
Zimbabwe cannot get loans from international lenders such as the World Bank
until it has retired its current debt of about $10 billion.
The country cannot continue on its current course, Biti warned.
“We are eating that which we are not killing. We are killing a rat and
consuming an elephant. That is not sustainable,” said Biti.
Wages for government workers consume about 70 percent of the treasury’s
revenue.
Biti hopes that when the board of the International Monetary Fund meets in
two weeks time it approves a deal to retire Zimbabwe’s international debt.