HARARE Zimbabwe plans to float a bond in South Africa and Finance Minister Tendai Biti has approached Pretoria to act as guarantor for the facility meant to raise money to revive stumbling industry, the Zimbabwean On Sunday learnt last week.The Ministry of Finance said in a statement that the possibility of floating a Zimbabwe Bond was one of the issues raised by Biti during a meeting with South African President Jacob Zuma on the sidelines of the World Economic Forum meeting held in Cape Town this month. The Honourable Minister made a proposal of floating a Zimbabwe Bond in South Africa to be guaranteed by the Government of South Africa as another option for raising funds to support the private sector, said the statement released on June 23.
The ministry said Zuma was amenable to the idea of the Zimbabwe Bond and promised to look into the issue. Analysts said the decision to ask Pretoria to guarantee the bond was reflective of Harares poor credit rating. It all goes to show that the government knows that people do not trust in the countrys capacity to repay loans due to our low credit rating, said Harare-based economist John Robertson.
The southern African country’s new coalition government, formed in February by rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai, has said it requires $8.3 billion to rebuild an economy shattered by nearly a decade of mismanagement and international isolation.
Other estimates, including one from the United Nations, put the Zimbabwe reconstruction bill at more than US$18 billion, which should be raised before the end of 2009. Although much of the funding is expected to come from sceptical
Western donors, who have demanded more reforms from the new administration, Zimbabwean officials are also looking at raising part of the money from the African continent.
Biti announced last month that Zimbabwe had received more than US$1 billion in credit lines from South Africa, Botswana, African Export-Import Bank and the Eastern and Southern African Trade and Development (PTA) Bank.
South Africa was one of the first countries to assist Zimbabwes new government when it offered R300 million budgetary support. Bitis proposal to Zuma came as a Zimbabwean delegation had embarked on an eight-nation European and United States tour to resuscitate ties with Western donors.
The delegation, headed by Tsvangirai, came back empty-handed but with a strong message that the rich nations would only provide economic aid once there are substantive political reforms in Harare.
Post published in: Economy