JOHANNESBURG - Zimbabwe is trying to clear its arrears with the World Bank and African Development Bank so it can unlock fresh credit lines to offset a liquidity and foreign exchange crunch.
It is also negotiating interim funding lines from China, South Africa, Botswana and the UK to prop up sectors like agriculture and mining.
The country faces a worsening economic crisis and partial liberalisation of the foreign currency regime has not brought a respite. Sellers of foreign currency are still holding onto their cash while pointing to a persistent liquidity crunch.
Sifelani Jabangwe of the Confederation of Zimbabwe Industries has stressed that forex sellers “are not on the market but buyers are there in abundance”, which is constricting fund flows.
Companies were again resorting to a parallel market and passing on the additional costs to consumers in the form of price increases, industrialists said.
“The economic slowdown is being made worse by declining aggregate demand. Our big corporations say they are feeling the heat and our fear is that this will affect the export sector,” added Jabangwe.
Zimbabwe exports mainly minerals, agricultural products, horticultural and some manufactured products. It imports just about every other finished product as local manufacturers struggle to sustain operations.
Finance Minister Mthuli Ncube says Zimbabwe has to go through a reform process, which is turning out to be bitter for many Zimbabweans. It has brought more austerity measures such as the removal of some subsidies, although some experts say this needs to be matched by a government commitment to fighting corruption and addressing the ease of doing business.
Ncube is banking on a staff monitored programme of the economic reforms Zimbabwe is undertaking and believes this will help Zimbabwe clear its arrears and gain access to new credit lines.
Meanwhile, Zimbabwe’s treasury is pursuing funding facilities from South Africa, China, Botswana and the UK.
Treasury officials said the credit lines would probably be secured on a business-to-business level.
“We are looking at other credit lines through South Africa, China and Botswana. I have been working on a structure to raise money from the UK for agriculture. We have lost 80 credit lines because we have not cleared our arrears,” Ncube said.
As it continues to struggle to stabilise its economy, Zimbabwe’s Industry Minister, Mangaliso Ndlovu, is poised to introduce an industrialisation policy which he expects to help the economy grow.
He has also sought to downplay threats that have been issued to the business sector for price increases, saying President Emerson Mnangagwa’s policy was against price controls.
Zimbabwe has added a new ‘surrogate’ currency to the nine already in its multi-currency basket, amid mixed feelings from the banking sector.