RSS 2.0 FeedJanuary 2010 Vol 1, Business , Financial and Property Indaba
Govt Sets Aside Funds to Bail Out Distressed Firms
Harare — GOVERNMENT has earmarked part of the US$510 million International Monetary Funds to bail out strategic distressed companies, Finance Minster Tendai Biti has said.
Harare — GOVERNMENT has earmarked part of the US$510 million International Monetary Funds to bail out strategic distressed companies, Finance Minster Tendai Biti has said.
In an interview, Minister Biti said this would be complemented by some lines of credit being arranged from local and regional financial institutions.
In the Three-Year Macro-Economic Policy and Budget Framework, Minister Biti said Government would be focusing on supporting distressed companies.
"Central to this would be innovation and the adoption of appropriate modern production processes that allow for quality and price competitive products," he said.
While STERP, the first economic blueprint to be adopted by the inclusive Government placed focus on expanding industry potential, liquidity constraints have seen most companies operating at subdued levels.
Among the strategic industries that have continued facing challenges is the textile industry which has seen most textile firms downsizing their workforce or liquidate.
Fertilizer companies are also struggling as a result of the shortage of critical raw materials, particularly for ammonium nitrate.
Under-performance of such companies is having ripple effects on sectors that are dependent on these firms.
Minister Biti said it was vital to broaden availability of short to medium term credit lines at favourable rates with reasonable grace periods of between three and six months and repayments over a year or two.
