In Davos for the World Economic Forum, Finance Minister Mthuli Ncube says he will stay the course on unpopular fiscal reforms despite protests, and announced that he is seeking US$500 million in credit lines for fuel. But ahead for him this week is the tough job of selling a country in crisis to sceptical investors.
Ncube, attending the World Economic Forum, said on Tuesday that he plans to meet three potential funders to negotiate credit lines, part of which would be used to procure fuel.
“While I’m here, I’m hoping to approach three private sector credit providers who are very keen to work with us especially in providing fuel and giving us a couple of credit lines up to the tune of US$500 million. So we continue to source credit lines; this is normal, there is nothing abnormal in sourcing credit lines.”
He did not name the institutions he is meeting.
Raising money on the international market was already a tough ask for Zimbabwe given its poor credit record, but Ncube’s work is now even harder after a security crackdown that rights groups say left at least 12 people dead. The violence has damaged President Emmerson Mnangagwa’s year-long effort to craft himself as a reformer and to reengage with the West.
On the shortages of fuel and rising inflation, Ncube says these were only symptoms of runaway State spending and the deficit. He insists that his plan to cut down the deficit to below 10% remains on track.
Zimbabwe needs its own currency, but the country has to take several steps before this can happen; setting up a monetary policy committee, narrowing the deficit, cutting expenditure, raising revenues and paying off arrears.
“First step is to clear what we owe to the World Bank and AfDB who are the preferred creditors. We want to show that we are making progress on the macro-economic front. We have to show that we are doing that, it’s painful and there are protests but we have to stay the course,” Ncube said.
A 150% hike in fuel prices sparked violent protests last week. Mnangagwa cancelled his trip to Davos and returned home after a four-nation tour of Eastern Europe.
On Twitter on Tuesday, Mnangagwa insisted that the fuel price hike was necessary.
Just a year ago, Ncube was heading private equity fund Quantum Global, and impressed Mnangagwa when he hosted a lunch for the President in Zurich with investors such as Glencore, Deutshe Bank, Novartis, Siemens, ABB and Swiss Re. This time, Ncube returns to Switzerland heading the Zimbabwe delegation as both Finance Minister and acting Foreign Minister. However, the curiosity of those investors from a year ago in Davos has since waned.