RBZ mobilises $250m for mining equipment

Business Reporters
The Reserve Bank of Zimbabwe has mobilised about $250 million mainly to acquire mining equipment, particularly for gold and diamond sectors, Governor Dr John Mangudya has said. Most of the loans were obtained from Belarus and are coming through the PTA Bank. The facility is part of several loans Zimbabwe is getting from Belarus to support productive sectors.

Dr Mangudya said it was critical to support mining, the country’s largest foreign currency earner. “We have found some lines of credit, which we are providing to both artisanal miners and big companies,” Dr Mangudya said while addressing a Parliamentary Portfolio Committee on Finance and Economic Development.

The facilities have enabled the RBZ to facilitate acquisition of equipment for the Zimbabwe Consolidated Diamond Mining Company. Zimbabwe’s mining sector contributes just above 50 percent of the country’s total export earnings.

Dr Mangudya said the central bank would continue coming up with measures to boost production to increase export revenue, one of the major source of liquidity in a multi-currency system. Zimbabwe opted for a multicurrency regime in 2009 to tame hyperinflation, which at the last official count stood at 231 percent in June 2008.

“We do believe this economy requires production. The cornerstone for Zimbabwe is export generation. If we don’t export, it means that we don’t oil the multi-currency system,” said Dr Mangudya.

“Zimbabwe is an open economy, which depends on balance of payments development.” Dr Mangudya emphasised that the introduction of bond notes was meant to provide a 5 percent incentive for exporters, including tobacco growers to enhance exports. He said the incentive would help exporters to stimulate production and cushion miners from declining commodity international prices.

“We said let’s have a five percent export bonus where we are providing incentives to exporters under the performance bonus.” The export performance facility is backed by a $200 million loan obtained from Afreximbank.

Contrary to the perception that the bond notes were meant to resolve cash shortages, the RBZ chief said that the “multi-currency currency is here to stay.”