- Published on 11 September 2014
- Written by New Zim
PRESIDENT Robert Mugabe's government was arm-twisted into settling its long-outstanding debts to China before the shrewd Asians agreed to new deals, Finance Minister Patrick Chinamasa has revealed.
Briefing business executives, government officials, MPs and diplomats at a breakfast meeting in Harare on Wednesday, Chinamasa admitted being taken to task by the country's sceptical benefactors who felt Zimbabweans were bad debtors.
Since January, he said, Treasury has been made to pump out an unbudgeted US$180 million owed by private and quasi-government Zimbabwean entities to restore faith with the shrewd Asians.
"We have been borrowing from the Chinese financial institutions and as soon as we borrowed, we never went back even to tell them that we had some challenges which prevented us from honouring our commitment," said Chinamasa, who has visited Beijing three times this year.
"So they wondered what kind of debtors we were; so when l went in January it was basically to say 'l have come back, we are new kids on the block, please let's start talking'.
"I was confronted of course with crimes of omission and commission; you have not been honouring these debts and so on. All in all in the six months this year, we have had to cough up US$180 million which was not in the budget just to make ourselves look good."
Among some of the defaulting companies are Sino-Zimbabwe Cement, Farmers World which owed the Chinese US$80m, TelOne which had a US$360 million debt and the now rebranded ZiscoSteel.
Treasury has also started making "token payments" of $150,000 owed with the World Bank, IMF, African Development Bank ostensibly to restore lost trust with the multilateral lending institutions.
The minister urged Zimbabweans to wait for four years before the country can start reaping any economic benefits from the so-called 'mega' deals.
He said he was frustrated by "uneducated" Zimbabweans who have inundated him with demands for overnight benefits from the deals, among them those aimed at capacitating the country's power generators.
"These projects take time, three, four years. So as far as l am concerned, once construction starts, l know that in three, four years we are going to be self-sufficient maybe even with a surplus to export," Chinamasa said.
He was referring to the Hwange power generating projects which have also received loan guarantees from China.
Wednesday's address was the first public attempt by Chinamasa to brief an expectant nation about the high profile business trip to China a fortnight ago.
But this was not before Chinamasa infuriated MPs by continuously keeping details of the deals a secret, let alone indicate when he intended to make them public.
Meanwhile, delving into specifics Wednesday, Chinamasa said government secured a US$219 million loan to help NetOne increase its tower coverage in the country as well as US$98 million for TelOne to extend its fibre optic network.
The mega deals, Chinamasa continued, are also aimed at supporting the mainstay agriculture sector, which saw Zimbabwean authorities tabling Dande irrigation project in the Zambezi Valley as well as Osborne Dam in Manicaland.
Both schemes have the potential to wet 10,000 hectares of projects each, owned by small-scale farmers.
The Chinese have also pledged support for the energy sector with the recent launch of the Kariba South extension which is set to contribute 300MW into the national grid.
The US$533 million project is partially funded to the tune of US$320 million by China Exim Bank.
Other concessions struck involve a US$55 million loan guarantee for the Gwayi Integrated Thermal Transmission project owned by Zimbabwe and China, itself a US$2 billion project set to contribute 600MW into the national grid.
Also tabled was the Hwange Thermal Powers Station Unit seven and eight, a US$1,2 billion project.
The Zimbabweans were also promised loans aimed at rehabilitating the country’s road and railway infrastructure.