James.Grage
AH legend
China will cancel about $40 million worth of Zimbabwe's debt due to mature this year and Harare hopes to facilitate use of the yuan currency in its economy.
The southern African country's Finance minister, Patrick Chinamasa said on Monday that both countries were negotiating the debt to be cancelled.
It is only in [Zimbabwean] banks where time reduces deposited savings
"They (China) said they are cancelling our debts that are maturing this year. Right now, preliminarily, we are coming up with a figure of $40 million," he said in a statement.
In the last five years, Zimbabwe has received more than $1 billion in low interest loans from China, which is Harare's second largest trading partner after South Africa.
In return, Zimbabwe says it will step up efforts for the use of the Chines yuan in the country, with tourists from the Asian nation being allowed to transact in the currency.
The yuan is already part of a basket of currencies that can be used in Zimbabwe, although its usage has been rather low.
After Zimbabwe's currency became virtually useless, the country adopted a number of currencies including the US dollar, the South African rand, the British pound, the euro and the Botswana pula.
China's yuan, the Japanese yen and the Indian rupee were later added to the basket at the beginning of 2014, but they have hardly found any takers in a market dominated by the US dollar.
Bank extortion
Meanwhile, Zimbabwe's financial sector came under rare criticism from President Robert Mugabe, who accused banks of "imposing sanctions" on locals and advancing extortion.
Speaking at the burial of one of his lieutenants in Harare on Tuesday, Mugabe accused banks of punishing clients for depositing their money.
Clients, he said, were losing the value of their savings with banks, who charged huge interests on borrowings, yet paid little for deposits.
"Banks seem to pass their own sanctions package against us, including those who deposit with them," Mugabe said.
"It is only in banks where time reduces deposited savings, instead of growing them. One gets punished for depositing savings with banks, it seems.
"One gets less for one's deposits, but pays more for borrowing."
He added: "The banks are still in the habit of charging interest rates well beyond the principle sum borrowed."
Zimbabwean banks charge up to 30 per cent interest on borrowings, while offering as little as 4 per cent on deposits, something symptomatic of a deflationary economy facing liquidity problems, analysts say.
But Mugabe was not amused, describing this as extortion.
"We have said this must stop; it is extortion, extortion by our banks. If they cannot do banking in the proper way, please, they should stop it," he said.
Banks were recently directed to reduce interest rates by more than 10 per cent by the central bank.
The southern African country's Finance minister, Patrick Chinamasa said on Monday that both countries were negotiating the debt to be cancelled.
It is only in [Zimbabwean] banks where time reduces deposited savings
"They (China) said they are cancelling our debts that are maturing this year. Right now, preliminarily, we are coming up with a figure of $40 million," he said in a statement.
In the last five years, Zimbabwe has received more than $1 billion in low interest loans from China, which is Harare's second largest trading partner after South Africa.
In return, Zimbabwe says it will step up efforts for the use of the Chines yuan in the country, with tourists from the Asian nation being allowed to transact in the currency.
The yuan is already part of a basket of currencies that can be used in Zimbabwe, although its usage has been rather low.
After Zimbabwe's currency became virtually useless, the country adopted a number of currencies including the US dollar, the South African rand, the British pound, the euro and the Botswana pula.
China's yuan, the Japanese yen and the Indian rupee were later added to the basket at the beginning of 2014, but they have hardly found any takers in a market dominated by the US dollar.
Bank extortion
Meanwhile, Zimbabwe's financial sector came under rare criticism from President Robert Mugabe, who accused banks of "imposing sanctions" on locals and advancing extortion.
Speaking at the burial of one of his lieutenants in Harare on Tuesday, Mugabe accused banks of punishing clients for depositing their money.
Clients, he said, were losing the value of their savings with banks, who charged huge interests on borrowings, yet paid little for deposits.
"Banks seem to pass their own sanctions package against us, including those who deposit with them," Mugabe said.
"It is only in banks where time reduces deposited savings, instead of growing them. One gets punished for depositing savings with banks, it seems.
"One gets less for one's deposits, but pays more for borrowing."
He added: "The banks are still in the habit of charging interest rates well beyond the principle sum borrowed."
Zimbabwean banks charge up to 30 per cent interest on borrowings, while offering as little as 4 per cent on deposits, something symptomatic of a deflationary economy facing liquidity problems, analysts say.
But Mugabe was not amused, describing this as extortion.
"We have said this must stop; it is extortion, extortion by our banks. If they cannot do banking in the proper way, please, they should stop it," he said.
Banks were recently directed to reduce interest rates by more than 10 per cent by the central bank.
