‘Zim can raise 70pc funding locally’
FINANCE and Economic Development Minister Professor Mthuli Ncube says Zimbabwe has potential to mobilise 70 percent of funding needed to finance key infrastructure projects on the domestic market, a situation that would lessen the burden of external debt payments on the State.
This comes as Zimbabwe is battling to repay a US$6,9 billion external debt, including nearly $2 billion arrears to global lenders, which has resulted in the country missing out on 80 potential lines of credit to local banks and has blocked access to cheaper fresh concessional financing.
Minister Ncube said this on Thursday during a presentation to students of the National Defense Course-Intake 7 of 2018at the Zimbabwe National Defence University, which is located in Mazowe.
The Treasury chief made the observation while explaining some of the major objectives of the Government’s Transitional Stabilisation Programme (TSP) covering the period 2019-2020, which include domestic resource mobilisation.
Minister Ncube said Zimbabwe has in the past tended to go for full external loan financing for key infrastructure projects when it could mobilise 70 percent of the funds required on the local market and borrow the balance of 30 percent externally.
The Ministry of Finance has previously indicated that Zimbabwe requires about $30 billion to bridge its infrastructural gaps and the infrastructure deficit spans across most sectors of the economy.
“We need to strengthen resource mobilisation. I am always concerned that we are not doing enough in terms of domestic resource mobilisation.
“How often do we do the following? We are thinking of a road to build and the first thing we do we go outside or try to get a loan and we spend (the little) foreign currency we have or we are borrowing huge US dollar base loan to finance the road and yet we got easily about $5 billion worth of deposits which could be
borrowed domestically without increasing any risk in terms of external debt.”
Minister Ncube said that mobilising critical resources to finance key infrastructure projects domestically would result in the country employing more local people and using local contractors.
“So building these roads and just by doing that we are able to employ local contractors, local skills, but of course we are not saying that we should not infuse that with foreign direct investmentwe should.
The Treasury chief said other key focus areas of Government’s transitional stabilisation programme were to position the economy on a sustainable recovery path and for the country to join the league of fastest growing economies in the world.
The minister said Zimbabwe was desirous to join the 6 percent club, made up of economies expected to grow at 6 percent or more per annum, which includes countries such as Ghana, Senegal, Ethiopia, Tanzania, Rwanda and Ivory Coast.
Fiscal consolidation, improved social service provision, promotion of investment and trade, provision of strategic socio-economic infrastructure and reengaging the international community and global lenders-both bilateral and multilateral financiers- are some of the key objectives of the TSP.
Minister Ncube said the TSP also sought to ensure food security and availability of basic goods in the market, fight corruption wherever it rears its ugly head, enhance the quality of public service delivery and provide critical infrastructure.