Ndamu Sandu
4 July 2009
FINANCE Minister Tendai Biti says China has not promised Zimbabwe any lines of credit, contradicting Prime Minister Morgan Tsvangirai's announcement that the country has secured a US$950 million from China.
Biti's denial fuelled speculation that Tsvangirai is at odds with senior figures in his MDC-T who believe that the Prime Minister is being soft with President Robert Mugabe.
On Tuesday Tsvangirai told journalists during a briefing on his three-week fundraising tour of Europe and the United States that Biti had secured a loan from China to help rebuild the economy.
"While I was away, government through Finance Minister Tendai Biti also secured lines of credit from China totalling US$950 million," he said.
But Biti was singing a different tune on Friday saying the government had not received a cent from the Chinese, described by President Mugabe and Zanu PF as Zimbabwe's "all weather friend".
"There's no foundation at all in reports that we have received US$950 million from China," the MDC-T secretary-general said.
Zimbabwe had made an unsuccessful application for lines credit from China in 2005 for a similar amount, Biti said.
Last year, the Ministry of Finance reactivated the application but nothing had materialised.
Tsvangirai's spokesman, James Maridadi said the US$950 million was only in pledges but he could not explain why Biti was insisting there was no funding coming from China.
He referred further questions to Economic Planning and Investment Promotion Minister Elton Mangoma and the Prime Minister's chief secretary, Ian Makone who were unreachable.
Biti also used the hastily arranged press conference to dismiss reports that he had signed a Memorandum of Understanding with the Chinese government that would have seen Zimbabwe receive another US$5 billion in exchange for platinum mining rights.
"Zimbabwe government has not signed or executed an agreement with China in relation to a disposal of any asset or platinum in Zimbabwe," Biti said.
Zimbabwe requires US$8.3 billion to kick-start the revival of the economy.
Tsvangirai's trip to western capitals did not bring inflows into the state coffers although there were pledges to be fulfilled if Zimbabwe addresses "grey areas".
Lines of credit amounting to US$2 billion have been secured for the private sector but nothing has come into government coffers.
The money that has been mobilised so far does not meet government's monthly requirements.
Although revenue inflows topped US$60 million in May from US$4.7 million in January, the money is inadequate to meet the country's growing needs.
Of the money raised in May, the civil service bill alone took half of the amount meaning that the other requirements had to fit into the remaining half.
The government has organised an investment conference for Thursday and Friday as it seeks to intensify its fundraising efforts.
Economic Planning and Investment Promotion Minister, Elton Mangoma on Thursday said a number of delegations have visited Zimbabwe to look for opportunities.
"Mines that had been closed are reopening and it is an investment," he said adding that industry is already responding to government interventions.
Mangoma said capacity utilisation in industries has increased to 30% from 10% and government aims to increase capacity utilisation to 60% by the end of the year.
But the mini-revival of industry is threatened by crippling power outages that have intensified during the past two weeks.
Biti said Zimbabwe was seeking a US$80 million credit facility with the Development Bank of Southern Africa to revamp the Hwange thermal power station and increase Hwange Colliery Company's coal output.
Despite having an installed capacity of 920MW, Hwange Power station is generating only 80MW due to coal shortages and refurbishments on one of the units.
Analysts say for Zimbabwe to get lines of credit, it has to clear its external debt as a means of re-engaging international financiers.
As at June 30, 2009, Zimbabwe's external debt stood at US$4.6 billion. Of that amount US$3.2 billion (at least 65%) is in arrears and analysts say without clearing the debt global lenders will not open lines of credit. They will only offer technical assistance.
A joint note by the International Monetary Fund, World Bank and African Development Bank says Zimbabwe has to clear its debt if lenders were to loosen their purse strings.
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