VENTURES AFRICA – A World Bank official has warned Zimbabwe against using its minerals as collateral to secure loans, with the debt ridden country currently struggling to meet financial obligations.
Zimbabwe is currently sitting on huge debts and has been struggling to pay its workers. the country’s Finance Minister, Patrick Chinamasa admitted last month that the government coffers are empty.
He indicated that President Robert Mugabe’s administration will put forward its diamonds minerals deposits in Eastern Zimbabwe as security to obtain a loan of over $10 billion from China to finance its pending obligations.
However outgoing senior World Bank country economist for Zimbabwe, Nadia Piffaretti told journalists in the capital, Harare on Wednesday that securitization of minerals is one way of financing things, but it also attracts a lot of risks.
“It’s not an easy solution because you might end up giving away more than you are getting,” said Piffaretti.
Piffaretti added that it would make for an unwise decision for a developing country like Zimbabwe to take that route as this might further weaken control of country assets, expected to be managed and enjoyed by future generations.
Zimbabwe, according to her, should be well aware of all costs involved before entering into any loan agreement to ensure its interest is protected. Negotiations should therefore focus on penalties and interest rates and must have a clear picture of the intricacies.
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