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ED says Govt’s economic plan is working. But is it?

By Mutsa Makuvaza

PRESIDENT Emmerson Mnangagwa said his Government’s economic plan is working as seen by the economic stability over the past eight months and the slowing down of the rate of inflation.

While indeed prices have somewhat stabilised and the crippling EcoCash agents have been wiped off the map, the President also said his Government is “rapidly developing” industry and bringing in investment, something many people will agree hasn’t been happening.

“Zimbabweans – the plan is working. We’re slowing inflation, increasing investment and rapidly developing our industry. This is just the beginning!” said the President in a tweet this Friday.

To kind of support his claim of economic improvement, the President attached an article by Bloomberg which says Zimbabwe’s inflation is slowing rapidly, and Government expects the economy to expand 7.4% this year, rebounding from a 4.1% contraction.

But the same article, while acknowledging that Finance Minister Professor Mthuli Ncube has stabilized the economy, says that much of the improvement has been due to nature and the global economy.

“Heavy rains are expected to result in the biggest corn crop since 1984 and have filled the world’s largest man-made reservoir, allowing more electricity to be generated from the Kariba South hydropower plant.

“Gold and platinum prices have risen over the past year, boosting mining income,” Bloomberg reports.

It goes on to say that with most goods imported, the few Zimbabweans lucky enough to have jobs have seen their spending power slashed.

The Government, which still owes almost US$7 billion in other external debt, has to repair its relations with international lenders and sanctions imposed on its leaders by Western nations because of political repression remain in place. But for the first time in a long time, there’s hope…

Meanwhile, the African Import and Export Bank (Afreximbank) has agreed to help Zimbabwe raise funding to refinance US$1.4 billion in loans to the pan-African lender.

The agreement will give the country some breathing space over the loan repayments to Afreximbank, which has become one of the biggest lenders to Zimbabwe after it was shut out from international financial institutions two decades ago for failing to repay its debts.

Between December 2017 and December 2019, foreign currency-starved Zimbabwe, through its central bank, entered into three loan deals with Afreximbank amounting to US$1.4 billion and using gold and platinum as collateral.

The agreement to refinance the loans, which is dated December 2020, was signed by central bank government John Mangudya on behalf of Zimbabwe and Ibrahim Sagna, Afreximbank’s head of advisory and capital markets.

“Afreximbank will use all efforts to assist in the debt raise as set out in this Mandate Letter. For the purposes of clarity, Afreximbank will identify and approach prospective financial institutions and investors who would potentially be willing to provide financing to Reserve Bank of Zimbabwe and source letters of intent from interested lenders/investors,” the agreement said.

Afreximbank will act as sole advisor and will remain a creditor. The original loans had terms of between three and five years and an interest rate of between 5.8% and 6.75% above the London Inter-Bank Offer Rate (LIBOR).

Under the deal, the loan facilities would have a longer repayment period of seven years and a fixed interest rate of 7.62%.

Zimbabwe owes foreign lenders, including the World Bank and African Development Bank more than $8 billion. — Zimbabwe Voice / Agencies 🔺

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