Standard Chartered confirms Zim debt payment plan, subject to reforms and UK nod

Standard Chartered confirms Zim debt payment plan, subject to reforms and UK nod

HARARE, December 6 (The Source) – Standard Chartered Plc has confirmed being part of a proposed debt resolution plan for Zimbabwe, but says it will only provide the funding after reforms and with the approval of the British government.

The privately owned financial weekly Zimbabwe Independent last Friday reported that the British bank was considering putting up $262 million towards clearing Harare’s $600 million with the African Development Bank (AfDB).

In October 2015, Zimbabwe agreed on a plan to clear its $1.8 billion arrears with the World Bank ($1.1 billion), the AfDB and the IMF, whose $110 million was paid last month.

President Robert Mugabe’s government hopes to clear arrears and open up access to fresh funding for Zimbabwe’s cash-starved economy. Without resolving its external arrears problem, Zimbabwe continues to carry a considerable risk premium, which dissuades potential lenders to both the government and private sector, while making the little credit lines available to the country expensive.

However, the veteran ruler’s opponents view the arrears programme, dubbed the Lima Plan after the October meeting in Peru that produced an agreement between Zimbabwe and the multilateral lenders, as a bail out for Mugabe’s government.

According to the Independent, Standard Chartered and the African Export and Import Bank (Afreximbank) would make equal $262 million payments towards Zimbabwe’s AfDB arrears. Zimbabwe would pay the balance, $82 million, the Independent reported.

“We were asked by regional banks to consider a financing deal,”Standard Chartered said on its official Twitter account following a string of queries.

“We wont proceed without full support of UK government and reforms.”

The UK government has, itself, had to defend itself against charges it was supportive of a ‘Mugabe bailout,’ frequently insisting it would not back any financial rescue package before Zimbabwe undertook far-reaching economic and political reforms.

However, despite denials, a February 2016 meeting between former senior Labour Minister Peter Mandelson — who now chairs Lazard International — and Zimbabwe’s Finance Minister Patrick Chinamasa in Harare, has inflammed passions both in the UK and Zimbabwe.

In July, Zimbabwe’s central bank governor John Mangudya told the Financial Times that Lazards were advising Afreximbank as it arranged a seven-year $986 million loan towards clearing arrears to the World Bank.

While Zimbabwe has committed itself to some economic reforms, in collaboration with the IMF under its staff monitored programme as well as the World Bank in terms of its ease of doing business programme, its record has been patchy.

The country is yet to significantly change its investment laws, which are viewed to be anti-investment, and has only paid lip service to reducing the government wage bill — which gobbles up more than 90 percent of total revenues — while resisting calls to reform state enterprises or to privatise them altogether.

While the government holds up a new constitution adopted in 2013 as a landmark political reform, its opponents accuse it of failing to introduce genuine electoral reforms, open up the broadcasting sector. They also accuse the government of ongoing human rights abuses, including the violent crackdown on protesters.