US$400m lifeline for infrastructure development

THE US$400 million facility the country secured from the African Export-Import Bank (Afreximbank) in June offers a lifeline aimed at addressing pressing issues in infrastructure development, trade finance, and foreign currency shortages, Old Mutual Investments Group (OMIG) has said.

The facility is a positive development for the country, noted OMIG in its monthly economic brief for June.

It is also a major financial boost to the Second Republic’s programmes for the stimulation of economic growth.

“Zimbabwe recently secured a US$400 million facility from the African Export-Import Bank (Afreximbank) to boost its economy and facilitate essential developmental projects.

Money – Image taken from Pixabay

“The financial package is expected to play a crucial role in supporting the country’s efforts to address the prevailing economic challenges and promote sustainable growth.

“Authorities cited the need for foreign currency resources to augment the measures that the Government has put in place to stabilise and grow the economy.

“The Afreximbank facility offers a lifeline aimed at addressing pressing issues such as infrastructure development, trade finance, and foreign currency shortages. Overall, the Afreximbank facility is a positive development for the country,” reads part of the report.

Although OMIG said the US$400 million facility might not be sufficient to sustain the stability of the local currency and support long-term growth prospects, it said authorities need to continue implementing measures to build foreign reserves, improve market confidence, and reduce external debt levels for sustained stability and growth.

“While the recently secured Afreximbank facility offers a lifeline, sustained economic recovery will require a combination of political stability, comprehensive reforms, and measures to attract foreign investment. Only through proactive and effective policies can the country overcome its economic challenges and achieve sustainable growth,” it noted.

The local currency continues to strengthen against the United States dollar both on the official bank rate and the parallel market in response to a cocktail of measures being implemented by the Government.

The Zimbabwe dollar was on Tuesday trading at US$1: $4 771 firming from US$1: $4 883 on Friday at the official interbank market.

The parallel market is also responding and as of yesterday, the local unit was pegged at US$1: $6 000.

The recent strategic interventions by the Government to tame volatility in the market include its directive for all import duties to be paid in Zimbabwe dollars except for luxury items, the transfer of external debt obligations from the Reserve Bank of Zimbabwe (RBZ) to Treasury and the introduction of the wholesale foreign currency auction for banks.

Reserve Bank of Zimbabwe (RBZ)

The Treasury has also directed all Government institutions to collect fees and other service charges in local currency. The Government continues to urge businesses to use the official exchange rates with a recommended 10 percent margin.-chronicle