'Mthuli Ncube blocks US$5bn deal'

UNITED Kingdom-based financial services consultancy ICG Capital and Finance Corp has singled out Finance minister Mthuli Ncube as the biggest obstacle stalling the finalisation of a US$5 billion debt restructuring and refinancing package it extended to Zimbabwe in 2017.

As exclusively revealed by the Zimbabwe Independent last week, the London-headquartered consultancy, in partnership with five top-tier United States banks, tabled the multi-billion dollar debt restructuring and refinancing package for Zimbabwe two years ago as part of a deal that could help the southern African country offset its ballooning liabilities. The proposal was tabled following the dramatic ouster of long-time ruler Robert Mugabe through a millitary coup in November 2017 and the subsequent ascendency of Emmerson Mnangagwa to power.

Zimbabwe, hamstrung by an US$18,6 billion debt stock, and cut off from accessing fresh lines of credit, is struggling to settle US$2,3 billion owed to various multilateral lenders. Although the southern African country is currently implementing an International Monetary Fund (IMF) Staff-Monitored Programme (SMP), the process does not include the desperately needed financial bailout package which is seen as key towards extricating Zimbabwe from its mounting debt woes.

ICG Capital and Finance Corp this week told the Independent that two years after submitting its US$5 billion debt restructuring and refinancing bid to Zimbabwe, the Harare authorities have dithered on the deal, while no other immediate solution appears in sight.

"We have been waiting a year-and-a-half to get the mandate signed in order to start the debt restructuring and re-financing process. Since ICG originally submitted its proposal in 2017, Zimbabwe's Sovereign Debt (SD) obligations have doubled and are now currently standing at approximately US$20 billion," said the London-based consultancy, which specialises in mobilising finance for private and public sector development projects and procuring credit for sovereign governments.

"It seems that for some unknown reason, the Ministry of Finance is not co-operative and are reluctant to work with ICG, unlike the governor of the Reserve Bank."

At the time of going to print, Ncube had not responded to questions sent to him.

The financial consultancy, which is currently mobilising US$1 billion loans for various countries in Eastern Europe, warned that owing to Zimbabwe's debt headache and in the absence of an immediate solution, the country's frail economy would continue hurtling down the abyss.

"The country is heading into a dire situation whilst the national economy continues to be mismanaged," the consultancy, which is currently financing multi-billion dollar infrastructure and energy projects across the world, told this newspaper through emailed responses this week.

According to the mandate finance agreement (MFA) negotiated between ICG Capital Corps and the Harare authorities - seen by the Zimbabwe Independent - the financial consultancy made commitment to mobilise US$4 billion in fresh capital through a Eurobond once the southern African country had extinguished its gargantuan debt stock.

The total deal would rise to US$5 billion.

With Zimbabwe referred to as "Party A" and ICG Capital amd Finance Corp as "Party B" under the MFA, the London financial consultancy would also be obligated to advise Harare on currency reforms as well as negotiating with various financial institutions for lines of credit on behalf of the southern African country.

According to the proposed agreement, once Mnangagwa's administration approves the bid by ICG Capital and Finance Corp, the debt restructuring and refinancing programme would be rolled out in five phases.

The deal would be implemented in stages, namely team set up and detailed planning, sovereign debt analysis, sovereign debt policy priorities, financing options and transaction management and close. The firm also committed to support Zimbabwe implement the ongoing IMF SMP which is tailored around a raft of reforms meant to deepen macro-economic stability and fiscal discipline.

According to the arrangement, ICG Capital would also assist Zimbabwe identify a "lead manager/book runner from amongst suitable investment banks".

The financial services consultancy also committed to advise Harare "in all aspects of the Eurobond transaction from choice of investment bank, through bond placement, to financial closing".