FEATURED: The Bushy Roads In The City Of Accra: Who Is Sleeping On The Job?...

17.03.2009 Zimbabwe

Zimbabwe urgently needs $1 Billion

By The Statesman

Zimbabwe's new inclusive government, looking for $2 billion from the region and at least $5 billion for economic recovery, desperately needs $1 billion over and above its fiscal budgetary requirements to meet an array of emergency financial obligations.

Failure to secure the $1 billion could cripple the operations of the new government that has raised public expectations on economic recovery and delivery of services, making its first 100 days a barren stretch.

SADC finance ministers and African Development Bank officials met recently in Cape Town to work out a $2 billion rescue package, but that is unlikely to come immediately. SADC leaders need to meet first to approve the package.

A confidential internal government memo circulated to selected ministries says US$1 bn is needed now to meet emergency obligations which include critical payments for fuel, electricity, water, grain, seed, fertiliser, lines of credit, diplomatic missions, parastatals, currency printing equipment, the Registrar-General"s office, presidential scholarships, security ministries, loans and debts.

The memo says as of last month, Zimbabwe owed Equatorial Guinea $222 million for fuel, Noczim $26,5 m,Noczim-pipeline $4m, lines of credit $195,4 m, GMB $106,05 m, corporate loans $240,74 ml, diplomatic missions $30 m, fertilisers $35,6 m, army/intelligence/police $20 m, Air Zimbabwe $10 m, Zinwa $5 m, China $5m, the Registrar-General $5m, presidential scholarships US$4m, Zesa $40m, seed $12 million and currency printing $100 m.

"This amounts to US$1,061,29bn. Government needs to swiftly raise this money to keep running,' the memo says. "Failure to pay some of these obligations urgently would further weaken the country's credit rating in regional and international markets.'

The need for emergency funding has created headaches for the new government which has no reliable source of revenue. Western nations have said no financial aid would be coming soon. The situation is further worsened by the global economic crisis gripping developed countries.

Only Australia, which does not belong to the G8, has promised $10 m in aid over and above the humanitarian assistance to deal with water, sanitation and health services. However, $10 m is a drop in the ocean given the needs.

With the International Monetary Fund, whose assessment team is currently in the country, indicating that no balance of payments support would be provided any time soon, Zimbabwe"s bid to raise $1 billion right away could be a nightmare.

To make the situation worse, government can no longer print money to meet its local obligations as the new Finance minister Tendai Biti is opposed to quasi-fiscal activities. The government used to meet its urgent financial obligations through printing money.