Finance and Economic Development Minister Mthuli Ncube has defended the currency swap deal with China, saying it will help the country service its over USD1,8 billion debt to the Asian country.
Ncube added that Zimbabwe is open to getting into other currency swap agreements with other countries. He said:
I have noticed that there have been some very colourful comments about the currency swap that we did with China. This is a solution for Zimbabwe.
Zimbabwe owes Chinese companies monies for projects that Chinese investors have undertaken here. There are certain remittances and payments we should have made because we borrowed through various institutions in China. So the arrangement is simply designed to solve that.
Economic analysts have however expressed scepticism over the benefits of the deal, arguing that because of the unfavourable trade balance, the deal would mean China will now spend less foreign exchange in Zimbabwe and use the local currency for transactions.
According to ZTN, a currency swap involves the exchange of money in one currency for the same in another currency, and companies doing business abroad often use it to get more favourable loan rates.