Banks Tighten Screws on Local Companies

A high placed source in the industry said that this was due to the serious liquidity crisis facing the poor country.

“There are sanctions on Zimbabwe and no credit facilities from international organisations,” he said.

“There is no cash circulating in Zimbabwe and foreign banks are not releasing any cash into the economy and so the Reserve Bank of Zimbabwe has been forced to limit cash to commercial banks who in turn have slapped a US$10 000 monthly withdrawal limit on companies here.

“If one needs to take out more from their bank then they have to apply to the RBZ which will bring back the days of the cash crisis in the country .It will also put a stain on companies who have a huge wage bill as well as high operating costs.”

The RBZ had not responded to questions put in writing by today.

The Government of National Unity (GNU) desperately needs US$45 billion over the next 10 years to regain the Gross Domestic Product (GDP) levels it boasted back in 1997 when the economy was kicking, a top economic analyst recently revealed.

Deprose Muchena, Deputy Director of the Open Society Initiative for Southern Africa (OSISA) said if the GNU needs to find $8,3 billion in the short term for its recovery programme on top of its current debt obligations, then Zimbabwe somehow has to find $15 billion in the short term.

“Overall, following the cumulative economic contraction between 1998 and 2008, the country needs US$45 billion over the next 10 years to regain the GDP levels it boasted back in 1997,” he said.

He said Zimbabwe’s sovereign debt overhang had not improved since the signing of the Global Poltical Agreement (GPA) or the inauguration of the Inclusive Government of President Robert Mugabe of Zanu PF, Prime Minister, Morgan Tsvangirai of the MDC-T and Deputy Prime Minister, Arthur Mutambara of the MDC.

Muchena said it was not set to improve in the “near future because the country still needed to battle to finance its economic recovery and social development programmes”.

Zimbabwe’s exact debt is debatable as oficial figures vary.

However, economists and analysts say Zimbabwe currently faces a debt overhang conservatively estimated at US$6,9 billion – including $5,2 billion in external debt.

Of the publicly guaranteed debt, $3,2 billion is in arrears – including $1,3 billion owed to multilateral creditors such as the Washington-based International Monetary Fund (IMF) and the World Bank as well as other international institutions.

Zimbabwe owes $1,6 billion to bilateral creditors such as the prestigious Paris Club and many other individual countries and $200 million to credit suppliers.

Some, however, say the country’s total external debt stock stands in the region of $7 billion.

“The first step is for Zimbabweans and the international community – to publicly acknowledge the size of the debt problem and how it is acting as a serious drag on the economic ship of State,” Muchena said in his analysis of the debt problem.

“While civil society orgnaisations in Zimbabwe have highlighted the issue, some elements of the Inclusive Government continue to deny the shocking reality of Zimbabwe’s indebtedness.
“In particular, there has been fierce opposition to declaring Zimbabwe a Highly Indebted Poor Country (HIPC), despite the fact that it is exactly that. But the issue is not about whether to declare the country a HIPC or not.

“Zimbabwe has already been declared a crisis country, a fragile State, a failed State, and a low income country under stress among others.

“These declarations do not resolve anything. Specific policy, legislative and economic governance measures are seriously needed.”