The African Import and Export Bank (Afreximbank) has agreed to assist Zimbabwe in raising funds to refinance $ 1.4 billion in loans to the pan-African lender, a copy of the agreement showed, Reuters said had seen on Thursday. The deal will give the country respite from repaying loans to Afreximbank, which has become one of Zimbabwe’s largest lenders after being banned from international financial institutions two decades ago for failing to repay its debts.
Between December 2017 and December 2019, currency-hungry Zimbabwe concluded three loan deals with Afreximbank through its central bank for a total of 1.4 billion US dollars and used gold and platinum as collateral. The December 2020 loan refinancing agreement was signed by Central Bank Government John Mangudya on behalf of Zimbabwe and Ibrahim Sagna, Head of Advisory and Capital Markets at Afreximbank.
“Afreximbank will make every effort to support the borrowing set out in this mandate letter. For the sake of clarity, Afreximbank will identify and approach potential financial institutions and investors who may be willing to provide funding to the Reserve Bank of Zimbabwe and seek letters of intent from interested lenders / investors, “the agreement states. Mangudya did not answer the phone When he received a call from Reuters, he was still responding to a message asking for comment, and Afreximbank did not respond immediately to questions sent by email.
Afreximbank acts as the sole advisor and remains a creditor. The original loans had terms between three and five years and an interest rate between 5.8% and 6.75% above the London Inter-Bank Offer Rate (LIBOR). Under the deal, the credit facilities would have a longer term of seven years and a fixed interest rate of 7.62%.
Zimbabwe owes more than $ 8 billion to foreign lenders, including the World Bank and the African Development Bank.
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