25 September 2018

Zimbabwe: President Dismisses Debt Trap Fears

Zimbabwe is attracting self-financing investments, particularly from China, and hence there are no fears of Harare falling into a debt trap, the President has said.

The Head of State and Government said this to Zimbabweans resident here at a lively and well-subscribed interaction with them on Sunday.

President Mnangagwa is here for the 73rd Ordinary Session of the United Nations General Assembly, where he will deliver his maiden address to the world's biggest international organisation since he won the July 2018 harmonised elections.

In a segment of the interaction during which he took direct questions from Zimbabweans, the President was asked what his administration was doing to ensure the country did not fall into a debt trap that could have dire consequences on developmental aspirations.

President Mnangagwa said most of the money coming from China was going towards revenue-generating infrastructure projects that would pay themselves off.

He said, "During (Zimbabwe's) period of isolation, very few countries outside the West assisted us. Some of the notable countries which came to our assistance are China, India, Brazil, Russia and Malaysia.

"And when things are good you then do not forget your friend who stood with you during bad times, but you do not sell your country because somebody stood with you during bad times.

"What is necessary when you get loans or investment, it must be structured. (There is need for) investment in projects which can re-finance themselves to pay the loan."

President Mnangagwa cited the two massive capital projects of the expansion of Kariba South and Hwange power stations, which are financed with Chinese capital.

"I do not see any danger where you have a project which becomes productive in terms of revenue streams to pay for itself," he said.

"When you finish paying the loan, the asset remains with us and we will continue to have electricity so I do not see the danger there."

Weighing in on the issue, Finance and Economic Development Minister Professor Mthuli Ncube, who is part of the President's delegation on the visit to New York, said China was "where the money is".

Prof Ncube also said African countries should negotiate sustainable terms when seeking loans.

"We have a very strong debt sustainability analysis framework which allows us to understand whether we are over indebted or not, (whether) we can pay or not.

"The Chinese also do that analysis themselves and if they find out that you cannot pay they do not lend you the money, this is not free money," he said.

At the recent Forum on China-Africa Co-operation, Beijing unveiled a $60 billion package to support development on the continent over the next three years.

Beijing's cumulative assistance to African development initiatives since 2000 was about $124 billion by 2016.

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