Zimbabwe has been battling to get financial bailout due to the country’s geopolitics and risk assessments that has forced lenders to take a wait and see attitude, Reserve Bank of Zimbabwe (RBZ) governor John Mangudya has said.
Mangudya said the country has been battling to access offshore lending due to the perception risk which was being driven by geopolitics and the few entities availing themselves to help Harare must be appreciated.
“First and foremost we need to appreciate the assistance being granted to Zimbabwe by international banks under the current circumstances when Zimbabwe’s access to foreign finance is so limited,” Mangudya said.
The central bank chief said this after parliamentarians last week quizzed finance minister Mthuli Ncube over the failure by the executive to bring to parliament loans that would have been sourced by the state for approval.
Mangudya said the continued bailing out of Zimbabwe by Afreximbank was “genuine” and it is among the few financial institutions still availing funds to Harare.
“In this context Afreximbank is a genuinely assisting the country when most financial institutions remain by the terraces due to geopolitical and country risk events,” said Mangudya.
The MDC MPs questioned why Afreximbank has advanced USD$1.25 billion to Zimbabwe when its balance sheet was just USD$2 billion with Tendai Biti raising suspension of underhand deals.
“On a technical and general basis, what determines a bank’s loans and advances to its clients is its capital base. The loans and advances are a multiple of a bank’s capital. So if a bank has say a capital of $2 billion it can advance say 10 times its capital. This also depends on the structure of lending which include syndications, guarantees, etc,” Mangudya stated.
“Our loans are within the agreed timeframe. We need, at all cost, to avoid biting the hand that is feeding us. It can be very costly for the economy.”