Zimbabwe seeks $10bn bailout from China

ZIMBABWE is seeking $10 billion bailout from China to kick start the economy which is comatose following the re-election of President Robert Mugabe in July 31.

The country, whose economy is stagnant, desperately needs white knights to rescue the economy which is in a tail spin.

Finance minister Patrick Chinamasa was scheduled to visit China month end to seal a $10bn financial rescue package for Zimbabwe that Zanu PF believes will kick start the economy.

Although Chinamasa was not immediately available for comment yesterday, sources said the China $10bn rescue package was a done deal.

Zimbabwe has mortgaged its mineral resources particularly Chiadzwa Diamond fields as part of the deal to secure $10bn deal from China.

On Friday Chinamasa, Foreign Affairs minister Simbarashe Mbengegwi and Media, Information and Broadcasting Services minister Jonathan Moyo met regional and international diplomats as part of efforts to re-engage the international community to rescue the country. But sources said the China sojourn was deemed the panacea to the country's economic quagmire.

China, the country's all-weather friend, has become one of the country's biggest trading partners after the government adopted the Look East policy.

Zimbabwe and the China Export and Import Bank last week signed a $319 million loan agreement for the expansion of Kariba South hydro-power project expected to go a long way in addressing the plethora of economic challenges besetting the country.

Under this arrangement, the bank will provide funding amounting to $319,5m - representing 90% of the total project cost, while the government, through the Zimbabwe Power Company will finance the 10% balance amounting to $35,4 million.

The project is expected to add 300 megawatts (MW) to the national grid, a development set to ease power outages which have largely been blamed for industry's poor performance evidenced by closure of an estimated 711 companies nationwide this year.

Zimbabwe's electricity generation capacity is estimated at 1 200MW against a peak demand of over 2 200MW and the country has been battling to attract foreign funding into the energy sector for long.

This has largely been due to ballooning external debt estimated at $11 billion, policy misalignments - chiefly the indigenisation law which calls for foreign companies to cede 51% of their shareholding to locals.

However, the government has of late been relaxing the implementation of the policy as the pressure to attract investment and salvage the ailing economy continues to mount.