HARARE – An agreement signed between Zimbabwe and South African power firm, Eskom tying Harare to pay weekly installments of US$890 000 to offset a legacy debt will pile further inflation pressures on the ailing economy, according to an advisory firm.

“After undertaking to pay South Africa’s Eskom US$890 000 weekly to service its legacy debt, we anticipate movements on the foreign exchange market,” Econometer Global Capital said in a paper sent to clients on Wednesday.

“The local dollar which is trading at an average of ZWL$9.5: US$1 is set to weaken both on formal and parallel market. Also top on the import list are fuel supplies, grain and medicinal drugs,” Econometer said in the report.

Last week, Zimbabwe undertook to pay US$890 000 in weekly instalment towards its debt to Eskom estimated at about US$33 million in May.

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Eskom together with Mozambique’s HCB, had slashed power export to Zimbabwe after the debt rose sharply at the end of 2018.

As a result, Zimbabwe has been facing a serious power crisis since January, which are expected to affect production in all sectors of the economy.

But since the agreement was made last week, the power supply situation has improved in Zimbabwe.