China rules out Zim budgetary support

Published: 06 March 2014

China has ruled out budgetary support to Zimbabwe.

Finance minister Patrick Chinamasa, who recently returned empty-handed from Washington after being denied funding by the International Monetary Fund (IMF), has bging for external budgetary support to finance the ambitious Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset).

The economic blue-print, launched last year by the Zanu PF-led government, requires $27 billion to be fully implemented.

Running on a meagre budget of $4,2 billion since 2009, Zimbabwe is grappling with funding challenges that are affecting economic recovery following a decade of decline.

Lack of investor confidence and fresh capital injection into the economy have spawned a serious liquidity crunch, forcing many companies to either scale down or close operations.

In an exclusive interview with the Daily News, Chinese ambassador to Zimbabwe Lin Lin said it was not his country's policy to provide budgetary support to other nations.

"We don't normally provide budgetary support to other countries but we try to help Zimbabwe in our own way," he said.

The latest development comes as a slap in the face of President Robert Mugabe and his Zanu PF government which established a "Look East" policy in 2003 aimed at harnessing economic and political support from the emerging Asian giant.

Zimbabwe cannot access external credit lines from international financial institutions such as the World Bank and the IMF after the country was stripped of its voting rights in 2003 and was nearly ejected from the grouping in a rare move for the Washington-based institution in 2006.

The restrictions were imposed after Zimbabwe fell behind in repayments to the Fund.

But in June last year, ahead of fresh elections, IMF said it would work with the country for the first time in more than a decade although ruling out new cash advances.

Lin, however, noted that China will always assist the southern African nation through donations and loans for infrastructure projects.

"In recent years, China has provided our Zimbabwean friends with donations such as food, fertilizer, and machinery worth millions of United States Dollars," Lin said.

"Moreover, we encourage Chinese financial institutions to provide concessionary and commercial loans to Zimbabwe. As a matter of fact, since 2009, China Exim Bank has approved loans to 6 projects in Zimbabwe, including the construction of the National Defence College, the Harare Water Treatment Project, medical equipment for hospitals in Harare, the Victoria Falls Airport Upgrading project, the NetOne Upgrading Project and the expansion of the Kariba South Hydro Power Station, with a total worth of over $820 million."

On Tuesday, China donated $500 000 towards the Tokwe-Mukorsi disaster.

In a desperate attempt to lure Chinese investment in the country, Zimbabwe in January this year added the Chinese Yuan to its multiple currency system basket, which include the United States Dollar, South African Rand, Botswana Pula, Indian Rupee, Australian Dollar and the Euro.
- dailynews

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