Zimbabwe settles on plans to borrow US$1,4 billion for various economic development projects

By Nevson Mpofu

In a bid to lift its economy , Zimbabwe has vitiated a deal plan to borrow US$1,4 billion from the International Monetary Fund (IMF). This is a financial move meant to cushion the trembling economy out of the blues and doldrums of covid-19 . The upsurge of the pandemic has so far recovered a little by 7,8 percent as of 2021 . It is looming out of the contraction of 5,3 percent in 2020 .

The economy is expected to grow by  5,5 percent in 2022 .Agriculture and mining the top sectors to grow by 5,1 and 8,4 percent respectively . Industry capacity utilisation is expected to reach 65 percent by end of 2021 from 47 percent in 2020 . Manufacturing sector is expected to grow by 5,5 percent .

According to Finance and Economic Development Minister Muthuli Ncube , there is improved access to foreign currency through the Reserve Bank forex auction systeem . The Minister who recently presented a national budget said the borrowed funds will fund infrastructure development projects across the country .

” The borrowed money is set to fund various infrastructure development projects . However , the debt will add to the existing stock of US$13,7 billion . The debt will be sourced through issuance of government securities , utilisation of the IMF special drawing rights (SDRs) allocation and external loan disbursement . SDRs were received in August as global package to stabilise global economy affected by covid-19 ”.

”Government has appointed Infrastructural Development Bank of Zimbabwe , IDBZ and African Export Import Bank , (Afreximbank ) as joint lead arrangers financial advisors. This hinges on the fact that we have secured the amount ”

If the amount is secured it will increase national debt to about US$15,1 billion at the end of 2022 . he said.”

Government of Zimbabwe in august 2021 received its Special Drawing Rights allocation amounting to US$958 million from IMF under the general allocation of US$650 billion injected into the global economy to help economies recover from covid.

The Finance minister added that SDRs will be utilised over a period of 3 years with an amount of US$$311 million expected to be disbursed towards social programs procurement of covid vaccines ( US$71 million) vaccine roll-out program (US $6 million) procurement of covid related medical and testing equipment (US$10 million) . (US$80 ) million is support for Agriculture productive social protection scheems for rural and peri-rural home holds and for road infrastructure program . This has been announced and learnt as of late last week when the statement on public debt was presented to Parliament along with the 2022 national budget .

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