Zimbabwe’s lenders, which include units of Standard Bank Group Ltd. and Ecobank Ltd., appealed to the central bank to raise interest rates that have been capped at 12 percent for the past two years, saying this would increase lending in the collapsing economy, Bloomberg News reported. They also proposed that the Reserve Bank of Zimbabwe introduce an overnight rate to facilitate lending between financial institutions and the central bank, Bankers Association of Zimbabwe submissions seen by Bloomberg show.
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Zimbabwe’s government dropped its insistence that a quasi-currency known as bond notes are at par with the dollar as it overhauled foreign-exchange trading and effectively devalued the securities, Bloomberg News reported. The measures are a step toward trying to create a new currency and stabilize Zimbabwe’s economy, which has been plunged into crisis as a shortage of foreign currency stoked the fastest increase in consumer prices in more than a decade and caused shortages of food, fuel and medicine.
Not having a currency of its own hasn’t stopped Zimbabwe from sliding into a currency crisis, Bloomberg News reported. A scarcity of foreign exchange has led to long queues for fuel, bread and medicine and sent prices surging across the southern African country. Police clashed with protesters in the capital, Harare, on Monday as the main trade-union group started a strike after the government more than doubled gasoline prices to $3.31 a liter ($12.58 a gallon) over the weekend, the highest in the world, according to GlobalPetrolPrices.com.
The World Bank and IMF have endorsed Zimbabwe’s plan to clear $2.2 billion in arrears to international creditors, the finance minister said on Wednesday, but U.S. sanctions may still prevent fresh loans to support the rebuilding of a shattered economy, Reuters reported. President Emmerson Mnangagwa has promised to revive the economy, pay foreign debts that the country has defaulted on since 1999 and end the international pariah status that Zimbabwe acquired under Robert Mugabe’s near four-decade rule.
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The African Development Bank said it’s working with Zimbabwe’s government to find a “sustainable solution” to settle its debt arrears and enable the state to start borrowing again, Bloomberg News reported. Zimbabwe owes multilateral lenders about $1.8 billion. President Emmerson Mnangagwa has said he plans to prioritize the repayment of the loans as he sets about rebuilding an economy destabilized by almost two decades of mismanagement under his predecessor Robert Mugabe. Central bank Governor John Mangudya said last week he expects the arrears to be cleared by September 2019.
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Britain will support Zimbabwe to get on to an interim IMF staff program to help the country quickly clear its foreign arrears, Britain's ambassador in Harare said on Tuesday. Clearing the $1.8 billion in arrears to the World Bank and African Development Bank is seen as a major step for Zimbabwe to start accessing foreign credit, especially for the private sector as well as foreign direct investment, the International New York Times reported on a Reuters story.
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London-based emerging market fund Gemcorp Group said on Monday it had extended a $250 million loan to Zimbabwe to help the country import essential goods like electricity, fuel and medicine, the company's CEO said. The southern African nation is facing its worst shortages of cash dollars since it dumped its own currency in 2009 in favour of the U.S. currency. This has made it difficult for companies, including mines, to pay for imports, the International New York Times reported on a Reuters story.
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The UK is teaming up with Standard Chartered Bank to lend $100m to Zimbabwean companies in what will be the British government’s first direct commercial loan to the southern African nation’s private sector in more than 20 years, the Financial Times reported. The loan is the biggest sign of a thaw in the UK-Zimbabwe relationship since London imposed sanctions on Robert Mugabe’s regime in the early 2000s. The rapprochement follows Mr Mugabe’s forced resignation in November in a “soft coup” that ended his 37-year rule.
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Zimbabwe’s finance ministry is planning comprehensive reforms of all the nation’s state-owned companies, including liquidation, forming joint ventures and the outright sale of some businesses, Bloomberg News reported. The government will seek input through the ministries under which the respective state entities fall, Finance Minister Patrick Chinamasa said in a statement handed to reporters in the capital, Harare, on Tuesday. Zimbabwe’s state-owned companies have long been a drain on the country’s finances, said Chinamasa.
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Zimbabwe is close to putting the final touches to a debt-arrears package that could see it receive an emergency injection of funds from the International Monetary Fund and other multilateral institutions into its cash-starved, drought-stricken economy, Zimbabwean officials said. The southern African nation — which has been treated as a pariah by the west for years — desperately needs money to pay civil service salaries, import food and alleviate a cash crunch.
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