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Zimbabwe Needs Loans to Revive Economy, Finance Minister Says


Zimbabwe's Finance Minister Tendai Biti (File)

Zimbabwe's Finance Minister Tendai Biti (File)

Zimbabwe's economy is growing but has yet to recover from the catastrophic collapse it suffered in the decade prior to 2009. This week the country's finance minister said he will seek loans from neighboring countries in hopes of meeting some urgent needs and getting the economy moving at a higher gear.

Some say diamonds glitter, but that shine seems to be failing in Zimbabwe.

“I regret to advise that the economy remains depressed irrespective of the prevailing stable macroeconomic environment and some output improvements in such sectors as mining," said Biti.

That is almost the norm for Zimbabwean Finance Minister Tendai Biti when he opens his monthly addresses to journalists.

He mentions mining, which many thought would anchor Zimbabwe’s economy after the collapse of the country’s once vibrant agriculture sector. Diamond prices remain high on the world market and Zimbabwe has diamond fields estimated to be bigger than the size of Wales in Britain.

But as Biti has noted in the past, little revenue from diamond sales reaches the national treasury. He accuses President Robert Mugabe's ZANU-PF party, which controls the Marange diamond fields, of withholding diamond revenue in preparation for future elections.

Independent economic analyst Paradzai Paradza, a former lecturer at the University of Zimbabwe, says that move is holding back Zimbabwe's recovery.

“It is actually a stand-alone case in the whole world because we have seen diamonds are rejuvenating economic growth in some countries. We have Angola, we have Botswana, we have countries like DRC who have transformed themselves into vibrant economies through diamonds. But in the case of Zimbabwe, the situation is not like that. I don’t think companies at Marange are not remitting the proceeds. I think they are remitting the proceeds, but the problem is who is getting the proceeds after they are remitted," said Paradza.

The news is not all gloom for Zimbabwe's economy. Since the formation of a power-sharing government in 2009, after a disputed election, the country has registered annual growth of about 8 percent.

But because of the shortfall in revenue, Biti says, regional countries will have to chip in to help his country through this year. He says Zimbabwe needs $400 million to mitigate drought effects, to raise money for by-elections and for a constitutional referendum, among other urgent needs.

Biti told reporters he has stepped up efforts to ensure that diamond revenue reaches the treasury. He also plans to appeal to Zimbabwe's neighbors in the Southern African Development Community.

“The second thing that we are also doing is appealing to our colleagues in the SADC countries," he said. "I have just come from South Africa where I secured an important appointment two weeks from now with the South African minister of finance. In this meeting we are going to make a request for budgetary support to the tune of $100 million from the South African government."

He says he wants the South African government to honor a pledge of a $60 million line of credit it made in 2009. From Pretoria he heads to Angola asking for a $50 million line of credit. Earlier this week Botswana extended a $70 million line of credit to Zimbabwe to revive its ailing industries.

Zimbabwe cannot get loans from international lenders such as the World Bank until it has retired its current debt of about $10 billion.

The country cannot continue on its current course, Biti warned.

“We are eating that which we are not killing. We are killing a rat and consuming an elephant. That is not sustainable," said Biti.

Wages for government workers consume about 70 percent of the treasury's revenue.

Biti hopes that when the board of the International Monetary Fund meets in two weeks time it approves a deal to retire Zimbabwe’s international debt.
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