Harare, Zimbabwe — MININGREVIEW.COM — 04 January 2010 – The government of Zimbabwe is considering mortgaging its mineral wealth in an effort to offset the country’s US$5.4billion (R40 billion) debt which is owed to a number of multilateral donor agencies.
A Zimbabwean ministry of finance report seen here by AFP and quoted by Fin24 said various options were being considered for paying off the external debt “’ an essential step to secure new financing from lenders for the period 2010-2012.
“A key condition for unlocking new financing of US$7.5 to US$10 billion (R56 to R75 billion) revolves around the development of a debt relief and areas clearance strategy for the country’s external debt overhang of US$5.4 billion (R40 billion), of which US$3.8 billion (R28 billion) is in arrears,” the report said.
“Also under consideration was the use of internal revenue resources; a request for debt restructuring from the Paris Club of lender nations; or an approach through the Highly Indebted Poor Country (HIPC) route for debt forgiveness,” the report added.
“Government “’ in co-operation with major creditors “’ will undertake in-depth studies on the various options to come up with a sustainable debt management and clearance solution which balances the interests of the country and its creditors,” it continued.
Zimbabwe has vast mineral resources, but the sector has been set back by a near decade of political and economic instability, worsened by a hyperinflation and power cuts.
According to finance minister Tendai Biti the country will need US$45billion (R337 billion) to restore its economic performance to levels last seen in 1996/7. Zimbabwe’s economy has contracted every year since then, but is expected to grow 4.7% this year after the local currency was abandoned last January and a unity government took office the following month.