Mthuli Ncube tightens screws on IMF linked US$80 million loan facility to industry

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By Alois Vinga

FINANCE Minister, Mthuli Ncube has set tight conditions on the US$80 million loan facility extended to industry which was drawn from the International Monetary Fund’s (IMF) Special Drawing Rights (SDRs).

The total SDRs allocated to the productive sectors of the economy amounts to US$80 million 8,4% of the allocated SDRs.

Unlike other facilities normally distributed through informal channels, the loan facility will only be accessed after participating banks have conducted due diligence.

“To access the loan, applicants shall submit an application through the participating banks and the respective banks shall conduct their normal credit assessments and due diligence through the risk sharing and co-financing model.

“The application from the bank should include a letter of support for the project from the line ministry. The banks will forward the approved applications to Treasury through the respective line ministry parent depending on the Fund from which the 80% cover Government guarantee is being sought,” said Ncube in an update.

The External and Domestic Debt Committee (EDDC), Treasury will appraise the applications and approve those that meet the conditions outlined in the Framework for Evaluating, Monitoring and Managing Guaranteed and on lent loans.

“In case of default, the guarantee can only be called after the bank has exhausted all possible means of recovery,” he said.

Zimbabwe was allocated US$958 million equivalent by the IMF as part of the SDRs General Allocation of US$650 billion that was released globally to all IMF member countries as a buffer in the wake of global economic shocks triggered by the devastating effects of the Covid19 pandemic.

It is from these resources that the treasury channeled SDR disbursements towards key economic productive sectors.

A US$30 million worth Horticulture Revolving Fund which is set to go a long way in empowering farmers to start horticulture projects, as well as acquire value addition facilities that will enable dehydrating, freezing, canning, bottling extracting, juicing and concentrating their produce.

Industry Retooling for Equipment and Replacement for the Value Chain Revolving Fund received US$22,5 million as part of support to companies with their own foreign currency requirements geared towards retooling and investments in value chains to increase both the local and export markets.

The Tourism Facilities Services Development and Upgrading Revolving Fund received a total US$7,5 million.

Smallholder Farmers Irrigation Infrastructure Development Fund US$20 million,  resuscitating companies which were affected by the Covid19 pandemic, with most enterprises closing down.