Zimbabwe expects a loan from the International Monetary Fund (IMF) in the third quarter of this year, the first since 1999, after paying off foreign lenders by the end of June, the central bank governor said on Wednesday.
Zimbabwean President Robert Mugabe’s government last week agreed to major reforms including compensation for evicted white farmers and a big reduction in public sector wages as the government tries to woo back international lenders.
Central bank governor John Mangudya said the IMF would decide the exact amount of the loan to issue at a later date.
The fund had agreed to double the amount available for Zimbabwe, known as a financial quota, to $984m, he said.
“We are talking about the third quarter, that’s when you see most of the action happening,” Mr Mangudya said in an interview, referring to when Harare expected the loan.
Zimbabwe would also receive an $896m loan from an unnamed country to pay off arrears to the World Bank.
In addition, the African Export-Import Bank would provide $601m for Harare to clear arrears to the African Development Bank (AfDB).
Zimbabwe would then receive the same amount as a grant from the AfDB, Mangudya said.
The Southern African country’s foreign debt stands at $8.3bn, of which $1.8bn is arrears.
Zimbabwe is trying to emerge from years of international isolation, largely blamed on Mr Mugabe’s policies, including economic mismanagement and the seizures of farms from mostly white farmers.
The worst drought since 1992 has left 4-million Zimbabweans facing hunger.
Mr Mangudya said the drought had forced the government to lower its growth target for 2016 to below 2% from 2.7%. The IMF and World Bank forecast growth of 1.4% and 1.5% respectively.
Once Zimbabwe clears its arrears, it would be ready for rating by international ratings agencies, with a view to issue international bonds in future, said Mr Mangudya.
Mr Mangudya said he supported the government’s decision to take over diamond mining in Marange because the government was receiving too little money from the operations.
The country’s courts have ruled in favour of mines that challenged the ruling Zanu (PF)’s action against them.
“After the rating we will then go for the Eurobonds and all to raise money on the international capital markets,” he said.
The government had issued $250m in treasury bills to raise money for its operations in 2015, Mr Mangudya said, adding that the bank would soon start holding public auctions of treasury bills to enhance transparency in state borrowing.
The central bank also issued $1bn in bills last year to creditors of the bank, which owes $1.35bn.
Source: Business Day