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Tuesday, 16 May, 2000, 17:21 GMT 18:21 UK
Zimbabwe's loans suspended
Cotton farmers in Zimbabwe
Agricultral earnings face decline
By BBC Business reporter Karen Hoggan

The World Bank has suspended new loan payments to Zimbabwe.

The move, which adds further to the country's economic woes, is in response to Zimbabwe's failure to pay its arrears on money it borrowed from the bank for infrastructure projects.

A bank spokesman refused to say exactly how much money has been lent to Zimbabwe or by how much it has fallen behind.

However he stressed that the action taken against the country was standard procedure.

If Zimbabwe doesn't catch up with its loan repayments soon the infrastructure projects could be jeopardised.

Falling revenues

It's scarcely a surprise that Zimbabwe has failed to keep up with repayments on money borrowed from the World Bank.

Its economy is in a bad way.

Inflation is expected to average around 50% this year; interest rates are at 70%, and unemployment is running at up to half the workforce.

Important annual tobacco auctions fell flat recently when many farmers refused to sell their crops - bad news since tobacco is the biggest contributor to the country's foreign exchange earnings.

The reason farmers held back was the soaring value of the Zimbabwean dollar which is making exports uncompetitive.

The farmers - and other exporters - want to see the Zimbabwean dollar being devalued by as much as a fifth to help them.

The occupation of white-owned farms, which began earlier this year, has damaged foreign exchange revenues still more.

Tourism, another big earner, has also been badly hit.

The falling revenue makes it even more difficult for the country to keep up with loan repayments.

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See also:

16 May 00 | Media reports
Regional concern over land crisis
04 Apr 00 | Africa
Zimbabwe's economic woes
11 Apr 00 | Africa
Zimbabwe's shattered dream
26 Apr 00 | Africa
Zimbabwe tobacco crisis
25 Mar 00 | From Our Own Correspondent
In search of fuel
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