Harare – Zimbabwe has now officially gone back on its agreement to pay its four main international debtors simultaneously and has said it does not know when it will clear its massive bill to financial institutions so it can borrow again.
Without new loans economists say Zimbabwe will not be able to emerge from its present financial crisis which is nearly as bad as when the economy froze in 2008 and it was forced to abandon the Zimbabwe dollar when it became worthless.
Finance minister Patrick Chinamasa adopted a plan in Lima in 2015 to repay the International Monetary Fund, the World Bank, the African Development Bank and the European Investment Bank more then R30 bn by late 2016.
So far Zimbabwe only managed to clear its debt with the IMF, and agrees it needs to urgently clear other debts particularly to the World Bank which it owes more then R20 billion.
All civil service salaries were paid late through 2016 and banks had to restrict how much cash – US dollars – depositors could withdraw.
Between Christmas and New Year there were queues of people sleeping outside banks around the country trying to withdraw some money.
To ease the cash crisis the Reserve Bank of Zimbabwe introduced a new currency, known as Bond Notes late November, but so far the R400 million in new notes released has done little to ease the situation, according to people in the streets. The new notes cannot be used outside Zimbabwe.
“It is bad. Before Christmas and at New Year, and I suppose next year too we will be here. We need to get money out of the bank, but they stay closed. We have to sleep here in case they let some of us into the bank during the morning,” said housewife Chipo Msika outside a bank in central Harare. “We are so tired and dirty,” she said.
Over Christmas the IMF confirmed that Zimbabwe would no longer clear its main debts to international financial institutions sumultaneously.
It did not say when it expected Zimbabwe would settle its debts.
On Friday, Zimbabwe weekly newspaper, The Independent, claimed Zimbabwe would “mortgage” its gold reserves and future production to settle its debt with the World Bank.
It said Zimbabwe would guarantee repayment of loans to pay off the World Bank via the gold deal and that this was arranged by the African Export and Import Bank, Afreximbank and Lazard Bank.
The report also said London’s Standard Chartered Bank would repay some of Zimbabwe’s debt to the African Development Bank.
Standard Chartered in London denied on Friday it was involved in any deal to repay any of Zimbabwe’s loans and said the report from Harare in which the Bank was named was “incorrect.”
Lazard Bank “declined to comment.”
Zimbabwe said it received 17,3 tonnes of gold in the first ten months of 2017, substantially more then the previous year.
John Mangudya, Reserve Bank governor, who initiated the production of Bond Notes into the economy, declined to comment on the latest speculation about how Zimbabwe will, or will not repay international financial institutions.
Chinamasa said he was away on leave until late January.
The World Bank local office, according to The Independent also declined to comment on the matter, but said it was ready to work with the government of Zimbabwe after it cleared its arrears. “This approach is standard to all international financial institutions. Upon arrears clearance Zimbabwe would be eligible as a borrowing member of the bank to a broad range of financing instruments,” the bank said.
Independent Foreign Service
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