SOUTH AFRICA is working on extending a short term credit facility in the region of $7 million to Zimbabwe to help write off Harare’s external arrears.
BY BUSINESS REPORTER
South Africa Finance minister Tito Mboweni
According to a report carried by the Daily Maverick, South Africa Finance minister Tito Mboweni and his Zimbabwean counterpart Mthuli Ncube are in talks over the specifics of a bailout package.
In the report, Mboweni is quoted as saying the two countries were discussing the possibility of South Africa extending an existing credit facility just short of R100-million (US$7 211 600,92) which Zimbabwe has with the South African Reserve Bank.
“Mboweni said Zimbabwe had provided collateral for this loan in the form of its holding of South Africa Land Bank bills. The extension of this facility depended on Zimbabwe being able to provide further collateral. Mboweni insisted that Zimbabwe had always repaid its loans under this facility in the past,” the report read.
He said South Africa was also discussing ways of helping Zimbabwe lift its debt to international creditors. Without mentioning a specific figure, Mboweni said this debt “is not a lot of money” and that he was sure Zimbabwe was looking not only to South Africa but to “other friends and institutions” to help it write off the debt.”
Last month, South Africa turned down a separate request for a $1,2 billion bailout package.
South Africa’s Treasury spokesperson, Jabulani Sikhakhane, told the NewsDay that his government did not have the money.
“There was a meeting in December where a request for $1,2 billion was made and obviously South Africa does not have that kind of money. It (the meeting) could have been towards the end of December (2018) around the 20th or somewhere there. We don’t have the money, it is just that simple,” he said.
Zimbabwe is desperate for fresh lines of concessional lending to rejig its ailing economy but the southern African nation is shut out by international lenders after defaulting on previous debts.
The country managed to successfully settle its debt to the International Monetary Fund (IMF) but it still owes the World Bank and the African Development Bank (AfDB) in the region of $2 billion with official data putting the total external debt at $11,5 billion.
Harare had been looking East pinning its hopes on China for a bailout, but Beijing has expressed reservations over Zimbabwe’s capacity to pay back.
Beijing has doled out more than US$700 million in loans and grants to Harare with close to US$200 million of the Chinese loans falling due this year alone.
China has been at the forefront of assisting Zimbabwe, which was considered somewhat of a pariah state under former President Robert Mugabe.
Zimbabwe turned to the Asian giant for financial, political and military support after facing a more than a decade of isolation from much of the international community.
“It is desperation. And also, as they say, a sinking man may clutch a serpent or at straws. It is unfortunate we are running all over the place trying to find relief and yet the relief is very close. First of all, we need as Zimbabweans to shut all the doors and talk to each other and come up with a resolution,” Labour and Economic Development Research Institute of Zimbabwe director Godfrey Kanyenze said.
“No one from outside will give money or bailout or whatever it is when they are not sure in terms of the future. When there is no ability in the country, the future is so uncertain, no one would pour in their money. You cannot push good money after bad, so in essence no country would give you money when they know that you are struggling.”