The Reserve Bank of Zimbabwe (RBZ) has borrowed $985 million from some African banks to enable the government purchase fuel and other critical imports, as current reserves of $500 million can only cover imports for just one month.
According to RBZ governor John Mangudya, the central bank borrowed
$25 million from Mozambique’s central bank, $152 million from Eastern and Southern African Trade and Development Bank and $641 million from the African Export and Import Bank, among others. The loans have a tenure of between three and five years, with an interest of up to 6 percent above the Libor rate.
“These loans are well structured facilities contracted last year. They will be paid from future (gold) export receivables,” Reuters quoted Mangudya to have told a parliamentary committee.
Central bank data shows that gold accounted for a third of Zimbabwe’s $4.2 billion earnings last year, making it the country’s single biggest mineral export earner. To fund critical imports and repay foreign loans, RBZ takes 45 percent of dollar sales from gold producers and half from other miners.
With arrears of more than $2.4 billion, Zimbabwe is unable to get funding from foreign lenders like the International Monetary Fund and World Bank. It has therefore sought help from neighbours and private lenders to shore up its budget. State-owned newspaper Herald had last week reported Zimbabwe was getting loans of $600 million from Botswana but President Mokgweetsi Masisi dismissed the report, explaining that his country only offered to guarantee $100 million private credit line for Batswana companies to invest in their troubled neighbour.
RBZ Governor Mangudya said as at December the government had borrowed $2.99 billion from the central bank, about three times its permissible overdraft limit.
President Emmerson Mnangagwa’s government has promised to reduce borrowing in 2019 under reforms to revive the Zimbabwean economy.
As part of efforts to address its economic crisis, Zimbabwe had last month scrapped a peg between its quasi-currency bond notes and the U.S. dollar and created the RTGS dollars which began trading at around 2.5 to the U.S. dollar. This had appreciated to 3.7 to a dollar on the parallel market early Tuesday. Finance Minister Mthuli Ncube had last week told Reuters that the local RTGS dollar will be backed up with fiscal discipline and the government would allow it to float freely against the U.S. dollar. However, excessive volatility would be managed.