Standard Chartered Bank is considering the financing of a $262m (£206m) package to bail out President Robert Mugabe’s cash-strapped government.
Bretton Woods institutions − including the World Bank (WB), the International Monetary Fund (IMF) and African Development Bank (ADB) − suspended their financial assistance to Zimbabwe in 1999 when the nation defaulted, and rendered it unable to clear a $1.8bn (then £1.36bn) debt it owes the institutions.
It has now emerged that London-listed Standard Chartered, which is emerging markets focussed and a constituent of the FTSE 100 Index, has agreed to look at ways to help raise funding to clear these arrears – and allow Harare to secure $2bn in fresh funding.
The IMF’s executive board said it will only release its financial chokehold once Zimbabwe pays off arrears to the ADB, $1.1bn to the WB, and $240m to the European Investment Bank (EIB).
“The African Development Bank and African Export-Import Bank (Afreximbank) asked us to look at a potential financing arrangement enabling economic development funds to be released to the Reserve Bank of Zimbabwe,” a spokesperson for Standard Chartered said in a statement sent to IBTimes UK.
According to documents seen by the Zimbabwe Independent newspaper, Standard Chartered agreed to look at ways to pay close to half of the $600m that the Mugabe government has to settle with the ADB.
Afreximbank is expected to pay the reminder under a refinancing scheme to clear part of the the government’s debt to ADB. It is understood that Harare will finance $82m on its own.
“Nothing has been agreed and we will not proceed without the full support of the UK government, among others, and the substantial reforms they require,” the bank’s spokesperson said in the statement.
This type of financing would have been unthinkable just a few months ago, after Western governments imposed sanctions on Harare in 2001 over allegations of vote-rigging and human rights abuses. However, most of the sanctions have been recently lifted, though those on Mugabe and his family remain.
Zimbabwe in October was awarded a $91.2m (£74.5m) package by the IMF, which had been held for seven years pending the settlement of arrears to the financial institution. Facing a potential financial meltdown, the nation’s reserve bank last week rolled out so-called “bond notes”, a form of new domestic currency.
British bank may finance Zimbabwean President Robert Mugabe’s cash-strapped government
Author: Elsa Buchanan