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Zimbabwe Needs Loans to Revive Economy, Finance Minister Says

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 

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 

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 

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 

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.


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