LONDON – Zimbabwe secured a US$500 million loan from the African Export-Import Bank to try and stabilize its currency market by offering platinum production as collateral, a person familiar with the details of the agreement said.
The Reserve Bank of Zimbabwe on Saturday announced on Twitter that the money would be released into the foreign-exchange market from Monday, without saying where it came from. Finance Minister Mthuli Ncube later said in a separate tweet that the funds were secured from “international banks,” without identifying them. The loan is of four years duration, the person said.
The use of platinum as collateral is another sign of Zimbabwe’s lack of creditworthiness as the country has struggled to borrow money from banks using standard repayment terms and has had to resort to its commodity production. As of the end of last year the country owed US$17,8 billion to creditors and is in arrears to international lenders such as the World Bank and the African Development Bank.
The loan comes after a currency-trading system instituted in February, whereby a quasi-currency known as RTGS dollars is traded on an interbank market, floundered because of a lack of liquidity and transparency. While the central bank has allowed the RTGS$, which it has previously insisted was valued at par with the dollar, to weaken to 3,48 to the dollar, the black market rate is six to the dollar. It had fallen as low as seven before the loan was announced.
George Guvamatanga, the country’s finance secretary, declined to comment, while Reserve Bank Governor John Mangudya didn’t immediately respond to a request for comment. Obi Emekekwue, a spokesman for Cairo-based Afreximbank, didn’t answer calls made to his phone or respond to email.
Zimbabwe is currently in the throes of its worst economic crisis since 2008 with shortages of medicine, fuel and electricity commonplace. Platinum, mined by Anglo American Platinum Ltd. and Impala Platinum Holdings Ltd., is one of its main sources of foreign exchange along with gold and tobacco.
Afreximbank is partly owned by African governments – Bloomberg