Zimbabwe and China to agree financial package
Zimbabwe's Finance Minister Tendai Biti arrives at the Parliament to present the mid-term budget on July 18, 2012 in Harare. PHOTO | JEKESAI NJIKIZANA | FILE
What you need to know:
- Finance minister Patrick Chinamasa had to delay the announcement of this year’s $4.7 billion national budget by a month because the government had no money
- Zimbabwe’s economy has suffered from a persistent liquidity crunch that has seen banks running out of cash
HARARE
Zimbabwe says it is on the verge of getting a ‘comprehensive financial package’ from China as it battles to breathe life into a struggling economy.
On Tuesday, China gave President Robert Mugabe’s government a $23 million infrastructure grant.
Finance minister Patrick Chinamasa who was in China recently to negotiate the financial aid package said a deal could be concluded within the next three months.
“During the visit, we agreed that the government of the People’s Republic of China and the government of Zimbabwe are working towards a comprehensive financial package and committed ourselves to finalising the matter within three months,” he told state media on Friday.
The government has indicated that an economic blueprint it unveiled after the July elections last year would need $27 billion to be implemented.
Mr Chinamasa had to delay the announcement of this year’s $4.7 billion national budget by a month because the government had no money.
SALARY INCREMENT DELAYED
This week President Mugabe’s cash strapped administration was forced to delay a salary increment agreed with its workers until April because it had no money to pay them.
Zimbabwe’s economy has suffered from a persistent liquidity crunch that has seen banks running out of cash.
The southern African country last month included the Chinese yuan among other Asian currencies in its basket of multi currencies to deal with the liquidity challenges. (READ: Zimbabweans to use nine different currencies)
Zimbabwe adopted multiple currencies in 2009 after doing away with its inflation ravaged dollar.
Since then the United States dollar and the South African rand have become the dominant currencies but there is still a serious liquidity crunch owing to the slow economic recovery.
At the time Vice President Joice Mujuru said adopting the yuan would be a natural progression as China is one of Zimbabwe’s biggest trading partners, absorbing most of the agricultural and mineral produce.
President Mugabe, who is banned from travelling to Western countries since 2002, has also been pushing for better trade relations with China and other Asian giants.
