News / National
Chinamasa summons bank over cut in lending
03 Mar 2014 at 06:33hrs | Views
FINANCE and Economic Development Minister Patrick Chinamasa has summoned senior management of an international bank in the country to provide explanation on why the bank has drastically cut its lending.
While Minister Chinamasa was not specific about the exact identity of the particular bank, he indicated it was one of the financial institutions between Barclays Bank and Standard Bank Chartered, which used to provide lines of credit of $800 million annually, but has whittled this down to $40 million.
He suggested that this could have been part of an exit strategy.
According to the Herald, Minister Chinamasa made the remarks during the two day beneficiation conference at Elephant Hills which ended on Friday.
He said he was in discussions with the International Finance Corporation, a unit of the International Monetary Fund, which had indicated willingness to extend lines of credit to Zimbabwe.
Further, the minister said he was negotiating with financiers from South Africa for lines of credit, but pointed out that in his discussions with the institutions he would seek to persuade them to lower their interest rates, as the 8 percent per annum they usually quoted are generally too high.
"They are saying they are prepared to assist us with funding but at 8 percent premium. That's expensive. There is discrimination there, because they are charging us a country risk premium.
"I've told them that you have no reason to lump us with country risk premium. We have resolved the most fundamental destabilising issue, which is the control of our resources. This has come at a great cost to us, but we are still standing," he said.
He added that South Africa understood Zimbabwe's political stability better than any other country, hence the call for non-punitive cost of finance.
Minister Chinamasa also said Government was willing to negotiate with mining firms on the issue of taxes on royalties.
"Let us sit down and agree. The lower the taxes, the better for the industry. We want to make sure we are benefiting from the depleting asset. Some of the suspicion we have is that some products are being sold to companies that are operating here.
"We are aware that we must not kill the goose that lays the golden egg, but the goose must not take with it the egg. Let the goose lay the eggs and the eggs stay in Zimbabwe. Let us understand each other (and say) how many eggs are being laid.
"I was discussing with my colleague about opening a special account where all revenue from mining and receipts from minerals. I am happy that they have pledged their commitment of this goal. We want a refinery, and in our discussions, I am told they are going to co-operate," Minister Chinamasa.
He said in the next five years, Zimbabwe should be ranked among the top five gold producers on the continent and should produce 50 tonnes annually.
"It is my ambition that in the next five years we should be among the top five gold producers in the continent," he said.
Minister Chinamasa said the country's infrastructure had essentially collapsed and he singled out the dire state regarding power, water supply, rail system and the country's pothole invested road network.
"First and foremost, our infrastructure has essentially collapsed. We are producing 1 200 mega watts against a demand of 2 200MW.
"There is no smoke coming out of chimneys in the manufacturing sector. Our roads and railways need fixing. Mining is the second most productive sector in terms of productive levels, but that's not happening," he said
He said of the US$4 billion national budget he presented in December, 73 percent of it was being spent in paying Government employees.
"We are paying people for sitting in their offices. That's the sad status of our economy." Minister Chinamasa ruled out downsizing the 230 000 Government employees.
"We are not going to seek a solution that looks at the retrenchment of civil service, our challenge is basically to grow the economy, so that these employment costs achieve their role in a larger economy," he said.
While Minister Chinamasa was not specific about the exact identity of the particular bank, he indicated it was one of the financial institutions between Barclays Bank and Standard Bank Chartered, which used to provide lines of credit of $800 million annually, but has whittled this down to $40 million.
He suggested that this could have been part of an exit strategy.
According to the Herald, Minister Chinamasa made the remarks during the two day beneficiation conference at Elephant Hills which ended on Friday.
He said he was in discussions with the International Finance Corporation, a unit of the International Monetary Fund, which had indicated willingness to extend lines of credit to Zimbabwe.
Further, the minister said he was negotiating with financiers from South Africa for lines of credit, but pointed out that in his discussions with the institutions he would seek to persuade them to lower their interest rates, as the 8 percent per annum they usually quoted are generally too high.
"They are saying they are prepared to assist us with funding but at 8 percent premium. That's expensive. There is discrimination there, because they are charging us a country risk premium.
"I've told them that you have no reason to lump us with country risk premium. We have resolved the most fundamental destabilising issue, which is the control of our resources. This has come at a great cost to us, but we are still standing," he said.
He added that South Africa understood Zimbabwe's political stability better than any other country, hence the call for non-punitive cost of finance.
Minister Chinamasa also said Government was willing to negotiate with mining firms on the issue of taxes on royalties.
"We are aware that we must not kill the goose that lays the golden egg, but the goose must not take with it the egg. Let the goose lay the eggs and the eggs stay in Zimbabwe. Let us understand each other (and say) how many eggs are being laid.
"I was discussing with my colleague about opening a special account where all revenue from mining and receipts from minerals. I am happy that they have pledged their commitment of this goal. We want a refinery, and in our discussions, I am told they are going to co-operate," Minister Chinamasa.
He said in the next five years, Zimbabwe should be ranked among the top five gold producers on the continent and should produce 50 tonnes annually.
"It is my ambition that in the next five years we should be among the top five gold producers in the continent," he said.
Minister Chinamasa said the country's infrastructure had essentially collapsed and he singled out the dire state regarding power, water supply, rail system and the country's pothole invested road network.
"First and foremost, our infrastructure has essentially collapsed. We are producing 1 200 mega watts against a demand of 2 200MW.
"There is no smoke coming out of chimneys in the manufacturing sector. Our roads and railways need fixing. Mining is the second most productive sector in terms of productive levels, but that's not happening," he said
He said of the US$4 billion national budget he presented in December, 73 percent of it was being spent in paying Government employees.
"We are paying people for sitting in their offices. That's the sad status of our economy." Minister Chinamasa ruled out downsizing the 230 000 Government employees.
"We are not going to seek a solution that looks at the retrenchment of civil service, our challenge is basically to grow the economy, so that these employment costs achieve their role in a larger economy," he said.
Source - Herald
