Zimbabwe’s unity government is planning to sell majority of state owned companies to raise funds to settle foreign and domestic debts.
Zimbabwe is currently in debt of over US$5.7 billion to both external and domestic creditors. The southern African nation has a poor debt payment record and risks losing assets over failure to clear liabilities.
Recently, the International Monetary Fund (IMF) withheld about US$102 million of Zimbabwe’s allocation of the Bretton Woods institutions special drawing rights until the country has cleared its IMF debt.
However, this week the country’s Finance Minister, Tendai Biti, said he is compiling a list of state owned firms which the government will put on sale to raise the much needed funds.
“In an effort to raise funds, the government is preparing a list of state companies it could sell, in the last four months we have looked at every asset that we own,” said Biti.
The list is expected to be complete within the next two weeks and is said to include telecommunications operators, banks and the National Oil Company of Zimbabwe.
Biti acknowledged that his government was currently in debt to the figure of US$5.7 billion, 150 per cent of the country’s Gross Domestic Product. He said that his ministry was working on a debt strategy.
Zimbabwe currently needs up to US$10 billion for economic recovery. It is officially estimated the country needs US$45 billion for the next 10 years to recover to 1997 Gross Domestic Product (GDP) levels.
Last week, there was serious debate between ZANU-PF and MDC ministers over the debt and arrears clearance strategy proposal currently under government consideration, as Zimbabwe battles to extricate itself from a huge debt trap.
Zimbabwe, southern Africa’s former breadbasket has seen its once vibrant economy shattered by poor policy choices by Robert Mugabe’s ZANU-PF government, particularly the seizure of white-owned farms for the resettlement of landless blacks.
But the formation of a unity government by Mugabe and his political rival, Prime Minister Morgan Tsvangirai, appears to have halted the economy’s free-fall, although unemployment still hovers around 80-85 percent and industries are operating at only 20 and 30 percent capacity.
The withdrawal of the worthless Zimbabwean dollar from circulation early this year is also breathing life into the economy, which had battled world record-breaking inflation.