SADC denies Zimbabwe rescue plan

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THE Southern African Development Community (SADC) has distanced itself from reports of a plan to use South Africa's rand currency to ease Zimbabwe's economic crisis, but said it was looking at ways to help the beleaguered country.

South Africa's Sunday Independent quoted unidentified sources as saying SADC was working on a plan to extend the rand monetary union to Zimbabwe, struggling with a meltdown critics blame on the skewed policies of President Robert Mugabe's government.

The crisis is manifesting itself in chronic shortages of basic commodities, fuel and foreign currency, while inflation has soared to 4,500 percent -- the highest in the world.

"SADC disassociates itself from any reported support packages as they did not originate from its Secretariat," the Botswana-based body said in a statement seen by Reuters on Wednesday.

But it said a summit of southern African leaders held in Tanzania in March had mandated SADC Executive Secretary Tomaz Salomao to undertake a study on the Zimbabwe economic crisis and propose measures on how SADC could help resolve it.

"To this end, a study has been conducted and a report will be prepared and presented to the Summit Troika of the SADC Organ on Politics, Defence and Security for consideration in due course," the SADC statement said.

The Sunday Independent said Zimbabwe could benefit from joining the monetary union, under which currencies are pegged to the solid rand, and which presently consists of South Africa, Namibia, Lesotho and Swaziland.

The Sunday Independent said the plan would involve the central banks in South Africa and Botswana injecting huge amounts of funds into their counterpart in Zimbabwe.

But on Wednesday Zimbabwe's state-run Herald newspaper quoted central bank Governor Gideon Gono as saying that "nothing of the sort, as reported, has even been or is under consideration."

Economists have said any regional aid package would only work if Mugabe's government agreed to significant economic and political reforms -- something it has resisted in the past.

Once regarded as southern Africa's breadbasket, Zimbabwe has suffered erratic food supplies over the past seven years or so, with critics pointing to the forcible redistribution of white-owned commercial farms among blacks ill-equipped to properly use the land.

Western donors, led by the IMF and the World Bank, have also suspended financial aid, citing among other reasons charges human rights abuses against political government by Mugabe, in power since Zimbabwe gained independence from Britain in 1980. - Reuters

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