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Zimbabwe secures $500m loan to ease dollar shortages

Reserve Bank of Zimbabwe Governor John Mangudya gestures during an interview in Harare, March 16, 2016. Zimbabwe expects a loan from the International Monetary Fund in the third quarter of this year, the first since 1999, central bank governor Mangudya said on Wednesday. REUTERS/Philimon Bulawayo REUTERS/Philimon Bulawayo

Zimbabwe’s Central Bank says it has secured 500 million dollars loan from unspecified international banks to support interbank currency trading from May 20.

Gov. John Mangudya, said in a statement in Harare, that the loan was to ease a dollar crunch that had brought fuel and medicine shortages.

Mangudya said that the central bank would start accessing the funds from Monday “to meet the forex payment requirements of business and individuals”.

“This amount shall go a long way to stabilise the exchange rates and prices of goods and services in the economy.’’

Zimbabwe’s apex bank introduced a new local currency in February, the RTGS dollar, and launched an interbank trading platform where businesses and individuals could buy and sell U.S. dollars.

But dollars have been scarce on the official market, where a U.S. dollar fetches 3.4 RTGS dollars, compared to 6.3 RTGS dollars in the black market.

The mismatch has seen companies and individuals with dollars selling their money on the black market where premiums are higher, amid charges that the central bank was manipulating the official exchange rate.

Finance Minister Mthuli Ncube, tweeted that the loan had been secured from international banks, which he did not name.

In the past week, the new currency lost 26 per cent of its value on the black market but is only 3.6 per cent weaker on the official market.

The weakening currency has fueled inflation, which raced to a new 10-year high of 75.6% in April.

Zimbabwe has not received funding from international lenders such as the IMF and World Bank since it defaulted on a loan repayment in 1999.

The country has largely relied on the African Export and Import Bank (Afreximbank) for foreign loans by mortgaging future gold export earnings.

Mangudya said in March that the central bank last year borrowed 985 million dollars from Afreximbank and other African lenders to purchase fuel and other critical imports.

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