Maravi

Biti, Gono differ over multi-million loan

Biti, Gono differ over multi-million loan
Written by Kingsley Kaswende in Harare, Zimbabwe
Friday, September 11, 2009 4:53:18 PM

A NEW row that exposes disunity in Zimbabwe's unity government has arisen between finance minister Tendai Biti and central bank governor Dr Gideon Gono over a multi-million loan that the International Monetary Fund (IMF) has given to the broke government.

Dr Gono over the weekend revealed that he was the custodian and disburser of the US $510 million loan the IMF had allocated to the cash-strapped government but Biti said the government could not afford to take the loan.

The allocation follows an agreement by the G20 group of the world's leading economies in April to increase to US $750 billion the IMFs support to economies stricken by the world recession.

All 186 IMF members are eligible to receive cash injections in proportion with their existing financial quotas with the fund.

Quotas are based broadly on the size of a country's economy, relative to the rest of the world's.

Under this formula, Zimbabwe is entitled to US $512.3 million.

The IMF stated on its website that US $408 million had already been deposited into the Reserve Bank of Zimbabwe account on August 28 and would attract a nominal 0.26 per cent interest, and that the loan had no conditionality attached. This means Zimbabwe would pay US$1.3 million per annum on its US $510 million advance.

The balance is expected to be deposited this week.

But Biti said the country could not afford the loan.

"It's not a grant, it's a loan. It attracts interest. We would be contracting debt when our balance of payments and our debt burden is very fragile. We have less than US $2 million in import reserves. Our arrears account for 150 per cent of gross domestic product. There is no way we can take that (loan) up in the context of the arrears and the deficit. It would be very imprudent," said Biti.

Zimbabwe owes the IMF about US $140 million in arrears.

Labels: GIDEON GONO, IMF, TENDAI BITI

posted by MrK @ 3:56 PM