In a bid to address the country’s economic woes and its impounding effect on its citizens, the Zimbabwean government has applied for a loan from the International Monetary Fund – IMF.
The loan would according to the central bank governor John Mangudya, be the first of its kind in twenty years, after paying off foreign lenders by the end of June and that the IMF would decide the exact amount of the loan it would issue at a later date.
“We are talking about the third quarter, that’s when you see most of the action happening,” Mangudya told Reuters in an interview, referring to when Harare expects the loan.
Zimbabwean government last week agreed engage in some major reforms which will include compensation for evicted white farmers and a big reduction in public sector wages as the government tries to win back international lenders
Not only will the country receive financial aid from IMF, it will also be receiving whooping sum of $896 million loan from an unnamed country to pay off arrears to the World Bank and $601 million for Harare to clear arrears to the African Development Bank (AfDB).
“The same amount is also expected to be given as grant by the AFDB,” Mangudya added.
Zimbabwe is trying to emerge from years of international isolation which has been largely blamed on President Mugabe’s policies which includes farm seizure from White farmers, alongside the firm grip of drought which has since 1992 cut the country from the economic world and has left 4 million Zimbabweans facing hunger.
In fact, the drought has according to Mangudya, forced the government to lower its 2016 growth target to below 2 percent from 2.7 percent.
In anticipation for the reality of the IMF forecast for the country’s economic growth of 1.4% and 1.5% respectively, the Mugabe-led government chose to embark on this major reform programs.
Mangudya said once its able to clear its arrears, it would be ready for rating by international ratings agencies, with a view to issue international bonds in future. He also pledged to support government’s decision to take over diamond mining in Marange because the government was receiving little money from the operations.
Meanwhile, the Zimbabwean government has issued $250 million in treasury bills to raise money for its operations in 2015 and Mangudya said that the bank would soon start holding public auctions of treasury bills to enhance transparency in state borrowing.
“After the rating we will then go for the Eurobonds and all to raise money on the international capital markets,” he said.