Martin Kadzere Senior Business Reporter
The World Bank is concluding funding requirements for Zimbabwe as part of processes to start lending to the southern African country, Finance and Economic Planning Minister Patrick Chinamasa has said.
Zimbabwe is in arrears of $1,2 billion to the World Bank and has already mobilised the funds to pay off its arrears.
However, the Government first wanted a commitment from the Bretton Woods institution on the loans that it could access after paying.
The Zimbabwean Government had since 1999 been unable to borrow from the international capital markets after it defaulted on its external debt.
While the country in 2016 cleared its arrears to the International Monetary Fund (IMF), it is still in arrears of $1,8 billion to the World Bank and the African Development Bank.
Minister Chinamasa told The Herald Business that Government had arranged a commercial loan to retire the arrears.
“What we said is before we pay you (WB), what expectations can we have in terms of new inflows as per our entitlement as a member, as a shareholder,” said Minister Chinamasa.
“They have been non-committal. Except now; they agreed since January to do a needs assessment, sector by sector, in order to determine and assess what are our needs per sector. What we need in terms of investment into agriculture, manufacturing, mining, tourism.
“The exercise in nearly complete. That is the exercise, which when concluded will inform the World Bank the amount of new inflows that we can draw on from the World Bank.”
The arrears have prevented Zimbabwe from accessing the global markets in terms of line of credit of around $4 and $5 billion annually, according to the minister.
Meanwhile, Zimbabwe’s economy is likely to grow faster that initially projected, largely driven by mining and agriculture.
Minister Chinamasa said on Tuesday the economy would expand 6 percent in 2018, faster than previous forecast of 4,5 percent.
The World Bank has in its latest forecast revised upwards Zimbabwe’s gross domestic product to 2,7 percent from 1,8 percent it had projected in January this year.
“We projected an economic growth of 4,5 percent this year and I believe that projection figure was on the conservative side,” said Minister Chinamasa.
“We should easily hit 6 percent.”
He said a number of investments, which could not take off largely due to concerns around indigenisation and empowerment laws under the administration of former President Robert Mugabe were now being implemented.
Some Chinese energy projects, which had been stifled by non-payment of arrears by the Government to the China Export and Credit Insurance Corporation were taking off.
China Export and Credit Insurance Corporation is a state-funded policy-oriented insurance company that promotes China’s foreign trade and economic cooperation.
Minister Chinamasa said the Government successfully engaged the Chinese Government on arrears which saw the world’s second largest economy unlocking funding for expansion of Hwange Power Station and upgrading of Robert Gabriel Mugabe Airport.
The ground breaking ceremony for $1,4 billion Hwange expansion is set for next week.
The southern African country has since declared Zimbabwe is open for business and repealed the indigenisation law, which limited foreign ownership of companies to 49 percent.
The law is now restricted to only two minerals, diamond and platinum, but even then, this is only temporary to allow Government to craft a beneficiation policy for them, after which the indigenisation law would be scrapped for the entire extractive sector.
“Those investments are now being implemented right across the board,” said Minister Chinamasa.
Zimbabwe will also register strong performance in the construction sector, driven by infrastructure projects, manufacturing and tourism.
“There is a lot going on for us in road construction. As you are aware; in agriculture we have been deploying a lot of resources to stimulate production in the agriculture sector. All that is going to translate into significant economic growth when we take in overall.”
Minister Chinamasa said even, the World Bank, which had been conservative on Zimbabwe’s growth prospects has observed the country was on a growth trajectory.
“This year we have. . . disagreements where we projected 4,5 percent growth this year but the World Bank had put us at around 0,7 percent,” said the Minister.
“I was happy to read from them that they are now projecting 2,7 percent. For me I don’t mind if we not agree totally. What is important is that the World Bank has observed that there is something happening in this economy,” added Minister Chinamasa.