Zimbabwe and China sign US$ 5 billion loan deal

By Richard High14 July 2009

Zimbabwe and China have signed a US$ 5 billion loan deal that will allow the government to meet half the funding requirements of its Short Term Emergency Recovery Programme (STERP), according to the Zimbabwe Guardian.

The loan, which will bolster funds available through STERP, will be used to finance projects in the construction, mining, agricultural, tourism and public works sectors, according to unnamed sources quoted by the paper.

The deal, added the report, is the largest signed between the two countries and is secured on various mining and infrastructural development rights.

Sources in Harare quoted by the paper say Finance minister Tendai Biti and Reserve Bank officials a Memorandum of Understanding (MoU) with China Exim Bank (CEB) guaranteeing the loan earlier this month.

CEB is the Chinese governments' export and credit guarantee agency has played an important role in fostering the rapid expansion of Chinese trade and investment in Africa.

Under the deal Zimbabwe will get US$ 5 billion from CEB and in return the Chinese get some equity in a US$ 40 billion platinum concession. The actual size of the stake was undisclosed.

Besides the platinum-backed loan, last week Prime Minister Morgan Tsvangirai announced Zimbabwe had secured a US$ 950 million credit facility from the Chinese government.

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