July 08, 2016
Sir, David Pilling and Andrew England report that “Zimbabwe is close to putting the final touches to a debt-arrears package that could see it receive an emergency injection of funds from the International Monetary Fund and other multilateral institutions”, “Cash-starved Zimbabwe closes in on deal to clear debt arrears” July 8.
And for that Zimbawe is receiving the advise of Lazard in order to arrange a seven years loan of $986m from the African Export-Import Bank (Afreximbank), in order to pay back arrears to the World Bank and IMF sin order to access more credit.
That sounds so rational, so hygienic, but should there not be a small question about whether if lending to Zimbabwe is ethical? I mean its government has not behaved too well, and there is no guarantee it will, and any new credit might just help to postpone any urgently needed change.
And so, independently of how juicy the risk premiums or the commissions might be, do the lenders really believe these loans will help Zimbabwe, and not only help some criminals, some technocrat or some bureaucrats?
Because if the lenders decide to bet on the government, and the government does not deliver, should they anyhow have the right to hold the citizens or any future government to repaying their non-earned winnings?
Sir, as a Venezuelan, I am naturally very interested in hearing your opinions on this.
And Sir, I have for decades argued that the world needs a Sovereign Debt Restructuring Mechanism but, for that SDRM to work in the best interests of us citizens, it needs to begin by identifying clearly what should be classified as odious credits or odious borrowings.