Golden Sibanda, Harare Office
THE Ministry of Finance and Economic Development has published the terms of the $ 1.4 billion loans that the country has obtained from the African Export and Import Bank (Afreximbank) since 2017 for strategic imports and support in local currency.
The publication of the terms and conditions of all public loans is a requirement under Section 300 (3) of the Constitution of Zimbabwe, which is fully provided for in the Public Financial Administration Act.
Harare obtained the loans, totaling US $ 1.4 billion over 36 months on three different occasions and for varying amounts; 600 million US dollars in 2017, 500 million US dollars in 2018 and 300 million US dollars in 2019.
The southern African country regularly imported essential commodities such as maize (especially during drought years), wheat and fuel, at a time when its own resources were insufficient to provide them.
The country has experienced a drought in recent seasons which has forced the government to source resources elsewhere.
The government, acting through the Ministry of Finance and Economic Development, guaranteed the loans, which were entered into by the Reserve Bank of Zimbabwe (RBZ) with Afreximbank.
The last loan was in the amount of $ 300 million, concluded in December 2019 for a period of 60 months and subject to LIBOR (London Interbank Offer Rate) plus 6.5% and a commission of commitment of 2% per year on the principal outstanding.
The annual loan management fee was set at 1.25% per annum, while the arrangement fee was a one-time payment of 1.25%.
The $ 500 million loan, concluded in May 2019, is subject to an annual management fee of 1.12%, an advisory fee of 1.25% of total commitments, a participation fee of 1.25% as well as a confirmation letter of 0.5% credit charges.
According to the opinion recently published by the Minister of Finance and Economic Development, this loan facility was intended for strategic imports and future monetary reforms. The loan, spread over 48 months, was intended to finance strategic imports of raw materials.
The first loan, amounting to $ 600 million, was for three years, with Tranches A and B subject to LIBOR interest plus 6.5% per annum, 1.25% management fee. and 0.5% debit fee on the amount advanced. to the borrower.
The start-up fee will be a one-time payment of US $ 12 million with funds earmarked for the purchase of strategic products.
Although there was criticism from some quarters on the aspects and rationale for the loans, in light of Zimbabwe’s tight debt situation, the country regularly needed help from a trusted lender afterwards. have been excluded by global lenders.
And Afreximbank was one of the very few global lenders to financially support Zimbabwe at a time when the economy lacked domestic reserves and resources to meet critical needs.
Zimbabwe has not had any trade relations with global lenders such as the International Monetary Fund, the World Bank, and the African Development Bank over the past due arrears, which accumulated when the economy went into a spin. turn of the century.