Zimbabwe uses platinum to pay back $400 million Afrexim Bank debt
Zimbabwe is using the proceeds of its platinum exports to settle a $400 million loan from the African Export-Import Bank as the indebted nation turns to its mineral wealth to open lines of credit.
The southern African nation’s reliance on its platinum resources to secure borrowing underscores the difficulty Zimbabwe faces in getting loans from international financiers. The country is saddled with $18 billion of debt and remains ineligible to new lines of credit from multilateral lenders including the World Bank, the International Monetary Fund and the African Development Bank.
In February, the government signed a $400 million loan from Afreximbank for budget support and the financing of trade-related infrastructure, according to the latest public debt report prepared for lawmakers by Zimbabwe’s Treasury. The financing carries a 10.2% interest rate and matures in six years, with the borrowing cost increasing to 12.2% in the event of default.
“The $400 million Afreximbank loan is repaid using 35% of Zimplats’ export proceeds, which are managed by the RBZ,” according to the report, referring to the Reserve Bank of Zimbabwe. Platinum miner Zimplats is a unit of the Johannesburg-based Impala Platinum.
Zimbabwe’s Treasury said the Afreximbank loan was “a huge success” for the government, given that it has been shunned for more than two decades by international lenders, and has limited access to external finance, especially for budget support.
The country, endowed with vast mineral resources including gold and diamonds, introduced last week a new levy on lithium and a wealth tax to fund an almost 14-fold increase in spending aimed at shoring up the economy. The increase comes after Zimbabwe’s dollar lost 89% of its value against the US currency this year, and annual inflation topped 176% before the way price-growth is measured was revised.
Talks with creditors on a debt clearance plan that Zimbabwe is championing under AfDB president Akinwumi Adesina will resume next month, after brief pause to allow for elections in August.
