Zimbabwe plans to float a $100m infrastructure bond

Zimbabwe plans to float a $100m infrastructure bond
Published: 22 March 2012 (2661 Views)
Harare - Zimbabwe plans to float a $100m bond to rebuild its dilapidated infrastructure as the country struggles to attract foreign investment, the finance minister said on Wednesday.

Zimbabwe's infrastructure, such as its roads, railways, dams and power plants, has been starved of finance due to a decade of economic collapse, which eased somewhat with the formation of a power-sharing government in 2009.

"Very soon we are going to issue a $100m infrastructure bond through our financial institutions," Finance Minister Tendai Biti told an investor conference in Harare.

He gave no further details, but said Zimbabwe was taking steps to reduce its external debt, a factor which has blocked funding for its infrastructure projects.

Biti said Zimbabwe's debt - mostly owed to the Paris Club, World Bank, African Development Bank and the International Monetary Fund - was set to reach $8bn or 118% of the country's gross domestic product by the end of 2012.

Biti said the unity government, formed by bitter rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai, had agreed to seek debt cancellation and use of minerals to clear the country's arrears with international financiers.

"The debt strategy we have adopted here is unique to Zimbabwe because it's a hybrid strategy," Biti said.

"It includes the adoption of traditional debt resolution initiatives, combined with leveraging the country's natural resources to achieve sustainable economic development."

Zimbabwe has been using the US dollar since 2009 when the country abandoned the Zimbabwean dollar after inflation reached 500 billion percent.

The coalition government has managed to stabilise the economy but the country faces a cash crunch as investors stay on the sidelines.

Biti, who is a member of Tsvangirai's opposition Movement for Democratic Change, said last week the government faced a shutdown because projected revenue from the diamond industry had failed to come through.

Investors have been unnerved by the government's drive to force foreign-owned mining companies to surrender majority stakes to blacks under an economic empowerment programme.

At the conference, Biti sought to allay investor fears, saying the government did not plan to expropriate shares and he urged companies to look at Zimbabwe as a long-term investment destination.

- Reuters

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