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IMF: Zim's Mineral Backed Loans May Complicate Future Negotiations With External Creditors

4 years agoTue, 04 Jun 2019 00:57:22 GMT
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IMF: Zim's Mineral Backed Loans May Complicate Future Negotiations With External Creditors

Gene Leon, the International Monetary Fund (IMF) mission chief to Zimbabwe has stated that foreign loans that Zimbabwe acquired using minerals as collateral may complicate the country’s future negotiations with foreign creditors. Zimbabwe currently owes about $8,8 billion and is struggling to service the debt. Resultantly, multilateral financial institutions have withdrawn lines of credit for the Southern African country.

In emailed responses to the NewsDay, Leon said:

In this context, the government has contracted external loans on commercial terms that are collateralised by mineral exports.

While these loans can help the authorities in responding to the economic and humanitarian crisis that is unfolding, they may also complicate future negotiations with external creditors to restore debt sustainability.

Leon said Zimbabwe’s projections of economic growth would probably be revised in the short term because of drought and cyclone Idai. The IMF forecasts the economy will shrink by 2,1% this year before it shoots to 3.3% next year.

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