'Borrowing to pay debt wrong move for Zimbabwe'

'Borrowing to pay debt wrong move for Zimbabwe'
Published: 25 August 2019 (86 Views)
FINANCE minister Mthuli Ncube's efforts to borrow US$1,9 billion from world economic giants in Group of Seven (G7) will not yield anything, economic analysts have said.

This comes after Ncube said Zimbabwe would get cheaper credit lines from the wealthy nations, which include Canada, France, Germany, Italy, Japan, United Kingdom, and United States (US) in order to clear debts from the African Development Bank (AfDB) and World Bank.

Economist Carren Pindiriri told the Daily News on Sunday that while it is not good to borrow to pay another debt, there are very low possibilities of G7 extending any soft loans to Zimbabwe given the high risk of failing to service the debt similar to current arrears.

"Since Donald Trump (US president) is taking the leadership of G7, I don't see us getting any money.
"I think by saying that it wants to borrow from G7, it has already cleared the ground to borrow the money. However, borrowing to repay debts is like borrowing for consumption, which is not growth-oriented.

"I don't know the terms of G7 loans, may be they are good to the extent that the country will remain with some beneficial margin after repaying the debts.

"However, there are dangers of falling into another debt trap. Borrowing must be for the productive sector so as to create capacity to repay the borrowed funds. Furthermore, our economy is deteriorating, a bad picture for future government revenue from tax collection," Pindiriri said.
Zimbabwe cleared its IMF obligations but is yet to clear AfDB and World Bank debts.

Ncube, however, further said immediately after clearing the liabilities to the multilateral financial institutions, Zimbabwe will seek a US$1 billion package from the creditors to repay the G7 debt.

Zimbabwe owes the Paris Club over US$2 billion. Ironically, the G7 countries are also part of the Paris Club.

G7 is currently hosting a summit in Biarritz, France, focusing on several global challenges, as well as highlight on broader international cooperation.

Thus, these are the same countries that oversee financial institutions like IMF and Zimbabwe cannot get fresh credit from any of the institutions if it has not paid its arrears.

Expert economist John Robertson echoed the sentiments saying the country is punching above its weight hence lenders will still have serious reservations as previous loans have not been repaid.

"Several other attempts have been made to borrow, but the only ones that worked needed forward sales of yet-to-be-mined gold and other exports. Part of the reason for the current foreign exchange shortage is that some years ago, we received the revenue for the gold we are producing now.

"Zimbabwe has to move on to a more promising development track so that new investors will find the country to be a good investment prospect.

"At present, Zimbabwe offers one of the most hostile investment environments in the world," he said.

- dailynews

Tags: MthuliNcube,
 0

You May Like These Videos

Comments

There are no comments.

Latest stories

Zambia to double electricity prices

by Reuters | 17 September 2019 | 177 Views

Arsenal fumbles a 2-point lead to a draw against Watford

by Staff Writer | 17 September 2019 | 90 Views

507 Nigerians leave South Africa

by Mandla Ndlovu | 17 September 2019 | 128 Views

Teacher takes home $24 after maintenance deductions

by Staff reporter | 17 September 2019 | 194 Views

'Dr Magombeyi's 'abduction' the work of a third force'

by Staff reporter | 17 September 2019 | 172 Views

Bosso settle for British coach

by Staff reporter | 17 September 2019 | 170 Views

Arrested 'Zimbabwean' millionaire swaps jail for a swanky Maserati in SA

by Staff reporter | 17 September 2019 | 126 Views

Mnangagwa's govt shoots itself in the foot

by Editorial - Daily News | 17 September 2019 | 189 Views

Mukanya doesn't want to be buried at Heroes Acre

by Staff reporter | 17 September 2019 | 186 Views

Gold deliveries to recover: Mangudya

by Staff reporter | 17 September 2019 | 166 Views

Mnangagwa in surprise Chamisa cheer

by Staff reporter | 17 September 2019 | 196 Views

Zanu-PF, MDC battle for Zaka East

by Staff reporter | 17 September 2019 | 155 Views

Tagwirei, Wadyajena square off in US$3,6m dispute

by Staff reporter | 17 September 2019 | 95 Views

Mohadi in South Sudan state visit

by Staff reporter | 17 September 2019 | 148 Views

'Treasury instructed us to pay US$660m to Sakunda'

by Staff reporter | 17 September 2019 | 169 Views

Mnangagwa in tight spot over kidnappings

by Staff reporter | 17 September 2019 | 197 Views

Lukewarm reception for Mugabe's body

by Staff reporter | 17 September 2019 | 156 Views

ZANU PF scores own goal

by ZHRO Team | 17 September 2019 | 235 Views

Doctors paralyse Zimbabwe hospitals

by Staff reporter | 17 September 2019 | 196 Views

'Teachers' unions pursuing political agenda'

by Staff reporter | 17 September 2019 | 152 Views

Tendai Biti led team queries 'rogue' RBZ payments

by Staff reporter | 17 September 2019 | 176 Views

Police shoot car's wheels to stop smuggler

by Staff reporter | 17 September 2019 | 154 Views

Gweru sued over shoot-to-kill policy on stray dogs

by Staff reporter | 17 September 2019 | 135 Views

Suicide cases rise

by Staff reporter | 17 September 2019 | 124 Views

Witchcraft accusations land woman in court

by Staff reporter | 17 September 2019 | 146 Views

Fresh calls for price controls

by Staff reporter | 17 September 2019 | 146 Views

Abductions choreographed ahead of Mnangagwa's UNGA meeting

by Staff reporter | 17 September 2019 | 138 Views

Jonathan Moyo reveals Zimbabwe's abduction team

by Mandla Ndlovu | 17 September 2019 | 211 Views

Govt pisses on the graves over Mugabe

by Zororo Shumba | 17 September 2019 | 189 Views

Kings and Mambos must be careful

by Presia Ngulube | 17 September 2019 | 152 Views

Competition and Tariff Commission under fire

by Nicholas Ncube | 17 September 2019 | 143 Views

Mnangagwa panics over Paul Siwela TV interview

by Israel Dube | 17 September 2019 | 271 Views

Harare house burns with US$200 000 inside

by Mandla Ndlovu | 17 September 2019 | 217 Views

Sibusiso Moyo's statement on the abduction of Dr Peter Magombeyi

by Mandla Ndlovu | 17 September 2019 | 253 Views

BREAKING: ZBC CEO granted bail

by Mandla Ndlovu | 17 September 2019 | 178 Views

Zimbabwe Communist Party speaks on abducted doctor

by ZCP | 17 September 2019 | 222 Views