Tawanda Karombo Harare
THE WORLD Bank had started a new $100 million (R1.1bn) fund to help resuscitate Zimbabwe’s economy, it said yesterday.
International financiers and lenders are slowly warming up to re-engaging Zimbabwe although inadequate implementation of measures aimed at fixing the business environment in Zimbabwe are stalling full restoration of aid assistance for the country, according to experts.
Multilateral financiers such as the International Monetary Fund (IMF) and the World Bank want Zimbabwe to clear its arrears, running beyond $9bn, before full lending programmes can be restored.
Zimbabwe’s economy has persistently shown signs of stress and the government expects it to grow by 3.2 percent in 2015, a growth projection experts have said would not be attainable. Limited lines of credit and constrained capital inflows have largely been blamed for this.
Kariba Dam
The World Bank moved in to plug some of the capital inflow problems Zimbabwe is facing after it approved a $75m loan facility for Kariba Dam wall infrastructure rehabilitation. The World Bank has announced that the almost $300m required for the dam’s rehabilitation project has been secured.
Sweden also gave a $25m grant for the same project. In the past few months, other grants and loan facilities have been advanced to the country through the African Development Bank under the Zimbabwe multi-donor trust fund this year.
“We have had successful implementation of the multi-donor trust fund. We are now starting a new multi-donor trust fund, the Zimbabwe Reconstruction Fund (Zimref) and up to $40m is expected next year,” Kundhavi Kadiresan, the World Bank director for Zimbabwe, Malawi and Zambia, said.
The Zimref was expected to get an additional $60m before the end of 2015, added Kadiresan. Kariba Dam is a crucial water and hydro-electricity source for Zimbabwe and Zambia, and there had been reports that the dam wall could collapse.
Zimbabwe’s infrastructure is in urgent need of rehabilitation and overhaul in some cases. Its rail network is almost dysfunctional while the road network, some airports, power and water works have now aged and require rehabilitation.
“It’s difficult to attract investors when you have such a poor state of infrastructure and for the World Bank and IMF it is equally difficult to advance lending programmes when that money will be spent on government expenditure,” an executive at a Zimbabwean bank said.
Finance Minister Patrick Chinamasa admitted yesterday that Zimbabwe “is in urgent need of fresh capital”, but was being held back by its indebtedness. The IMF has ruled out debt cancellation as Zimbabwe did not qualify for the highly indebted nations debt cancellation programme by the Bretton Woods institution.
“It civil service wage bill should be carried out in a manner that is not threatening. We should do a production audit, which should match skills to performance.”
Economists added that the government “needs to put its priorities right” as almost 90 percent of the $4.1bn 2014 budget estimate that Chinamasa announced last week would be bogged down by recurrent expenditure.
Investors and fund managers have also said that Zimbabwe should clarify its indigenisation policy.