HARARE - Zimbabwe's finance minister said on Tuesday the government had deferred by a year payment of the first tranche of compensation to white farmers who lost their land, due to delays in finding a financial advisor and the impact of COVID-19.

Last year, the government agreed to pay half of the $3.5 billion compensation by end of this month and the rest over five years to the farmers whose land was expropriated by the government to resettle black families. 

But Mthuli Ncube said it had taken longer than expected to appoint financial advisors, who would help raise money through issuance of domestic and foreign bonds among other options.

"The parties therefore agreed to extend the period for the first payment from 31 July 2021 to 31 July 2022," Ncube said in a statement.

Compensating the farmers is seen as an important step in resolving one of the most divisive policies of the Robert Mugabe era and improving ties with the West.

Ncube said the government set aside 2 billion Zimbabwe dollars ($23.5 million) in this year's budget as relief payment to distressed farmers.

(Reporting by MacDonald Dzirutwe; Editing by Alex Richardson) ((macdonald.dzirutwe@thomsonreuters.com; +263 4 799 112; Reuters Messaging: macdonald.dzirutwe.thomsonreuters.com@reuters.net))