South Africa approves US$1bn credit line for Zim

South Africa approves US$1bn credit line for Zim

GIDEON Gono

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By Staff Reporter

SOUTH AFRICA has already signed a provisional deal to provide a $1.0bn (R6.50bn) credit line to Zimbabwe to repay a long overdue loan from the International Monetary Fund and thereby avoid possible expulsion from IMF arrangements, Business Day reported on Friday.

The newspaper quoted "normally reliable Zimbabwean sources", who said the draft deal had been agreed last week.

A Zimbabwean source said: "A provisional agreement was signed and South Africa commits itself to providing Zimbabwe with funds to settle our IMF debt."

SA government spokesperson Joel Netshitenzhe told Business Day that "other consultations involving the national treasury and the reserve banks of both countries" had taken place but refused to confirm if the draft deal had been signed.

"I am not aware of it but it does not mean that a memorandum of understanding does not exist," he said.

Zimbabwe's central bank chief also hedged the issue.

"I don't comment on routine bilateral consultations with my counterparts," he told AFP in Harare.

When asked if he went to South Africa and met central bank officials, he said: "I don't divulge details of my travels."

In a separate interview to South Africa's Mail and Guardian weekly published on Friday, Zimbabwean President Robert Mugabe's spokesperson George Charamba meanwhile stressed that Harare would not accept any loan with conditions pre-attached and added that other countries had also been approached for the bail-out loan.

"We have also made representations to the Indian government," he said.

The IMF has warned Harare of expulsion from its arrangements and closed its offices in Zimbabwe late last year as relations worsened with the government of President Robert Mugabe, which blames US, British and European Union sanctions for its economic plight.

Zimbabwe has fallen behind in IMF repayments on more than $300m in debt since 2001. The IMF in February gave the government six months to meet its obligations or face expulsion.

Last month, the IMF trenchantly criticised a controversial "clean-up" operation launched by Harare which targeted shantytown shacks, shops and buildings deemed illegal which has left some 200 000 people homeless, according to UN estimates.

Many families have been dumped in transit camps in the middle of the Zimbabwean winter, and are now living in makeshift tents and shelters.

The IMF said the clean-up operation would exacerbate Zimbabwe's dire economic situation with economic output expected to decline "sharply" this year amid intensifying difficulties in agriculture caused by drought and foreign exchange shortages.

It said that on present policies, Zimbabwe's budget deficit will jump this year, "partly due to the cost of higher food imports, interest payments and higher pension costs" - afp
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