South Africa has agreed to assist its neighbour Zimbabwe clear its mounting debt. According to a Bloomberg, the leading economy in Southern Africa has offered to use its influence with big financial bodies such as the International Monetary Fund and the World Bank to strike a financing deal for Zimbabwe’s struggling economy.
Zimbabwe’s economy has been struggling under growing debt, high rates of inflation, and low productivity. The nation is experiencing violent protests due to high price of basic commodities and a shortage of foreign currency.
Zimbabwe needs a debt clearance plan before accessing new loans. The agreement between South Africa and Zimbabwe will allow Zimbabwe to obtain fresh loans from the international lenders. The country plans to use the new loans to revive its economy.
The country’s Finance Minister, Mthuli Ncube stated that Zimbabwe’s total debt amounts to $16.9 billion as at October 2018. According to the Minister, Zimbabwe owes $680 million to the African Development Bank, $1.3 billion to the World Bank, and $308 million to the European Investment Bank.
South Africa agreed to the debt clearance plan due to its close link with Zimbabwe. Millions of Zimbabweans live in South Africa after they fled economic hardship in Zimbabwe during President Robert Mugabe’s reign.
