Zimbabwe’s sovereign credit risk profile improving

HARARE - Zimbabwe’s sovereign credit risk profile is improving as shown by a number of foreign banks that are extending loans to the country, Finance Minister Mthuli Ncube said Wednesday.

He said Zimbabwe this month successfully negotiated for a US$193 million sovereign loan facility from two South African banks, Standard Bank and ABSA, and Zimbabwe’s Standard Bank Limited for the construction of new healthcare facilities in the country.

The loan facility is backed by the Export Credit Insurance Corporation of South Africa (ECIC) and a term sheet was signed by the Zimbabwean government, the lenders, and the ECIC in mid-March, after which the ECIC Board approved the loan facility Tuesday, Ncube said.

“The signing of the term-sheet is historic, as external banks are now extending lines of credit to the Government of Zimbabwe, which reflects the improvement in the country’s sovereign credit risk profile,” the finance minister declared.

He said the participation of the foreign banks in the project was based on the Zimbabwean government de-risking the project.

“The financing package is highly significant for Zimbabwe. In addition, this structured financing ushers in an exciting re-emergence of Zimbabwe on the international capital markets for the delivery of quality healthcare infrastructure for the people of Zimbabwe,” he said.

Zimbabwe is excluded from international credit markets due to unsustainably high foreign debt and has since 2001 not received loans from multilateral institutions such as the World Bank and the International Monetary Fund due to debt arrears.