TIME Bank of Zimbabwe Limited (Time Bank) has raised its syndicate loan proposal to the government by nearly 9% to US$38 billion, as authorities are becoming desperate to pay off creditors.
In September, Time Bank made an ambitious proposal of arranging syndicate loans of US$35 billion to the government as part of a strategy to compensate 10 groups of people owed significant amounts of money.
A syndicate loan is a large loan provided to a borrower by a group of lenders (called a syndicate). Such loans are usually used for big transactions or projects like government infrastructure projects, debt restructuring, or corporate acquisitions that are too large or risky for one lender to deal with.
Hence, in Time Bank’s proposal, it would use syndicate loans to help the government repay creditors by acting as an intermediary to arrange and secure the appropriate funding.
With the government of Zimbabwe hosting the High-Level Structured Dialogue Platform Forum - Arrears Clearance and Debt Resolution Process today, pressure is on the authorities to speedily deal with public debt of US$21 billion as of June.
“Time Bank has proposed to offer a loan of US$38 billion to the Government of Zimbabwe (Government), for the purpose of financing the payment of compensations to 10 groups of people including Previous Farm Owners and other groups of people who also deserve such compensations in an inclusive manner,” Time Bank said, in a statement last Friday.
“Time Bank awaits approval of the loan proposal by government, and hopes it will be approved accordingly. The loan amount has been increased from US$ 35 billion to US$ 38 billion because of increased demand and the feasibility of such increase from the supply side.”
The groups are previous farm owners to which Time Bank is seeking a syndicate loan repayment of US$3,5 billion, first group of indigenous Zimbabweans (US$10 billion), and compensations to depositors of banks of 2009 (US$1,1 billion).
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Others include compensations to pensioners (US$1 billion), compensations to insurance policy holders (US$400 million), compensations to ex- farm workers (US$400 million), compensations to any resettled farmers (US$400 million), and compensations payable to the second group of indigenous Zimbabweans (US$400 million).
Lastly, Time Bank is proposing syndicate loan repayments for foreign investors under Bilateral Investment Promotion and Protection Agreement or Bilateral Investment Treaties of US$400 million and US$20,4 billion to foreign lenders.
Time Bank said the loan proposal addressed the issues raised by the International Monetary Fund in October 2023.
This is because Time Bank’s loan proposal will provide a clear path to foreign debt resolution, debt sustainability and provide safety nets for vulnerable groups.
“There are legal and moral obligations to pay the above -mentioned compensations, in an inclusive manner, to all the 10 groups of people. The number of groups of people or the exact amounts of compensation for each group are subject to an agreement between government and the particular group,” Time Bank said.
“Time Bank’s loan proposal to government is subject to the negotiations between government and foreign lenders being successful, on the resolution of the foreign debt crisis, and Time Bank’s loan proposal is intended to be part of such resolution of the foreign debt.”
The bank said the loan proposal was a homegrown solution which met both local and international standards.
“The loan proposal will utilise local resources, including adding value to Zimbabwean products before selling or exporting them. Under the loan proposal there will be viable sources of repayment for such loans,” Time Bank added.
Some of Zimbabwe’s creditors have claimed more money than the public debt figure.
