The debt over hang has prevented Zimbabwe from accessing fresh funding. The country’s been working with IMF on reforms to reduce its recurrent expenditure to free up funds so it can start servicing its arrears. It’s undertaken to clear $1.8 billion of its debt in the first half of the year, a step the IMF said could unlock fresh capital.
“Debt forgiveness, thawing relations with international creditors, and the prospect of unlocking much-needed technical and financial assistance are credit positive for Zimbabwe,” Moody’s .
The international credit rating agency says use of the Chinese Yuan in bilateral trade with China as well as in local transactions was likely to facilitate greater levels of FDI from, and bilateral trade with, China. Last year Zimbabwe’s government said it would encourage greater use of the Chinese Yuan along side a basket of international currencies including the US dollar, South African Rand and British Pound, that were adopted in 2009 after the country phased out the Zimbabwe dollar. China is Zimbabwe’s second biggest trade partner.
“The reality is that China is big factor in the global economy we need them our people fly into China all the time wouldn’t it be better that they using that instead of transacting using the US and lose a lot value in the process. I think right now because we totally incapable of introducing our currency this move is a step in the right direction.” Davison Gomo, Economic Analyst
Using the Yuan could also help lower the country’s current account deficit. However use of the Chinese unit, alone is not enough to solve Zimbabwe’s long standing problems.
“All this is underpinned by production. Production is the sustainable panacea to this economic quagmire that we find ourselves in. as long as we are not producing we cannot sustainably produce enough liquidity in the economy.”Prosper Chitambara, Economic Analyst
A large number of Zimbabwe’s industries have buckled under pressure from economic problems that beset Zimbabwe for more than a decade and half. Currently industry is operating at a third of its capacity
