Zimbabwe: Mugabe Desperately Seeks For US $4 Billion Chinese Bailout
By Staff Writer
Zimbabwe’s President Robert Mugabe will embark on a state visit to China on August 21 as he desperately seeks a US$4 billion rescue package to stabilize country’s worsening economic crisis characterized by a stubborn liquidity crunch, revealed government sources.
Zimbabwe has been eyeing for a US$10 billion package from China, but government sources revealed the current push was for US$4 billion.
China’s ambassador to Zimbabwe Lin Lin in an interview with the press on at his office Thursday July 31 confirmed the visit, which comes few days following a similar visit by Finance minister Patrick Chinamasa, who led a 20-member inter-ministerial delegation to the Asian economic tiger last month.
Chinamasa’s visit was officially described as a “10-day working visit to study the working of the Chinese economy”.
He also visited China in January, but returned home empty-handed.
Chinamasa is currently in Russia as he continues to press for financial assistance that is proving to be elusive.
Mugabe last month appealed to a visiting China Communist Party (CCP) delegation to assist by funding what he said was Zimbabwe’s “economic struggle that we shall be waging with our natural resources so we can produce the necessary wealth for our people”.
World Bank’s senior economist Nadia Piffaretti, in June warned Zimbabwe against mortgaging its minerals for financial aid saying it will jeopardizes future generations’ welfare. She said it would be better if the country sought loans at concessionary rates instead of securitizing minerals to secure loans.
After being rebuffed by international financial organizations such as the International Monetary Fund (IMF), World Bank as well as investors with capacity to inject foreign direct investment, a desperate Mugabe has increasingly looked to “all-weather friend” China for assistance in reviving the crumbled economy.
Sources say the president’s visit was essentially a follow-up to Chinamasa’s visits, to push for a rescue package.
“The president will be leaving on the 21st and we are hoping that the visit will lead to the sealing of a US$4 billion assistance package with the Chinese government,” said one senior government official.
Zanu PF has come up with an economic blueprint, ZimAsset, which requires about US$27 billion to fully implement between 2013 and 2018, but government has so far failed to mobilize the funds.
George Charamba, Mugabe’s spokesperson refused to comment on the planned visit or rescue package last week, referring questions to Chinamasa.
Ambassador Lin did not give a specific date and details about the rescue package, but he confirmed Mugabe would most likely return home with some funds.
However, he too declined to disclose the structure of the deal, how much Zimbabwe wanted and how much Beijing was likely to part with, referring questions to Finance Minister.
The government has been planning to securitize the country’s minerals in order to acquire desperately-needed funding for infrastructural projects and to fund ZimAsset, and it is believed this was contained in Chinamasa’s proposals to the Chinese.
Zimbabwe has previously received funds exceeding US$1 billion from China in preferential and concessionary loans to fund various projects, among them the National Defence College, Victoria Falls Airport upgrading and the Kariba South Power Station extension programme.
Since 2010, Zimbabwe received more than US$100 million in grants and interest-free loans.
Government sources also said Mugabe is again to visit China sometime next year, but only this time as Zanu PF leader in reciprocation to the recent visit by the CCP delegation.
China in the recent past has been accused by the west of shortchanging African countries in order to acquire minerals to feed it growing demand for resources back home.