Zimbabwe seeks US$500m credit lines in Davos

FINANCE and Economic Development Minister Professor Mthuli Ncube is set to negotiate for more than $500 million in credit lines with three unnamed private financiers at the ongoing World Economic Forum in Davos, Switzerland.

In an interview with Bloomberg in Davos yesterday, Prof Ncube said if accessed, the loans would be used to address the prevailing fuel situation in the market as well as support Zimbabwe's foreign currency base.

"While I'm here, I'm hoping to approach three private credit providers who are very keen to work with us especially giving us fuel and giving us credit lines up to the tune of US$500 million," he said.

The World Economic Forum, which kicked off yesterday and runs until Friday, gives the Government an opportunity to market Zimbabwe and its vision of becoming a middle income economy by 2030 to the international community.

Prof Ncube was upbeat that if advanced the credit lines, this would also go a long way in addressing some of the economic challenges Zimbabwe was presently going through. The country has been facing fuel shortages since last year due to acute foreign currency shortages and hoarding of the petroleum product by motorists.

Recently, the Government increased the fuel price from an average of $1,37 a litre to $3,31 a litre of petrol and $3,11 for diesel with a view to ensuring viability of the petroleum sector. And in a bid to contain inflationary pressures caused by the recent fuel price adjustments, the Government was also providing relief through refund of excise duty on fuel consumed by enterprises in the manufacturing, mining, agriculture and transport sectors.

Prof Ncube said the Government was also working on reducing Zimbabwe's inflation rate to a single digit before the end of the year by putting an effective framework to harness the inflationary pressures the country was experiencing.

"Part of it (framework) will be technical as we are coming from a low base of a sharp hike of prices which moved us to a higher level of the index and creates a higher inflation figure," he said.

"Part of the conditions to achieve that is to work on our fiscal discipline, bringing down the budget deficit to a single figure and making sure there is compliance in the revenue collection front".

Data from the Zimbabwe National Statistics Agency shows that the country closed the year with an annual inflation of 42,09 percent rising by 11,08 percentage points from the November rate of 31,01 percent.

Economic analysts have attributed the upward trajectory of Zimbabwe's year-on-year inflation to continued price escalation of basic commodities driven by speculative parallel market rates and persistent foreign currency shortages.

"We need to build the micro- institutions for full monetary policy conduct in the sense of introducing a monetary policy committee.

"We also need to show the world that we are making progress on the macro-economic front by addressing our arrears in terms of what we owe other countries," said an economist.

Prof Ncube has said the country will have its own currency within the next 12 months as Government was frantically working on raising enough foreign currency to anchor it.