Zimbabwe close to clinching $100m SA loan

Zimbabwe's Finance Minister Tendai Biti. FILE | NATION MEDIA GROUP 

Zimbabwe is close to securing a $100 million loan from South Africa for next year’s budget support, Finance minister Tendai Biti said on Sunday.

Mr Biti in September met his South African counterpart Pravin Gordhan to ask for the loan after making similar requests to Angola.

He told state media Zimbabwe’s economically powerful neighbour had agreed to extend the loan but a few issues had to be ironed out first.

The money will be used for infrastructure projects and to help the country achieve its millennium development goals (MDGs).

“As to the purpose of the fund, it will go towards socio-economic development projects so that we can bolster our meagre budgetary coffers,” Mr Biti said.

Zimbabwe had to slash its 2012 budget by $400 million after diamond mining companies failed to remit the expected $600 million to the Treasury.

Zimbabwe cannot access funding from multilateral lenders such as the International Monetary Fund because of longstanding arrears.

Last month, South Africa's Minister in the Presidency in charge of the National Planning Commission, Trevor Manuel, said there had to be trade-offs for the loan to Zimbabwe.

He said South Africa could not throw money at bad policies, which was seen as an attack on President Robert Mugabe’s push to seize foreign-owned enterprises.

“Money is tight,” Mr Manuel said. “There has to be trade-offs and mutual gains. Nobody can throw good money at bad policies or practices. That would simply be irresponsible.”

South Africa has extended a number of loans to Zimbabwe since President Mugabe formed an inclusive government with his former opponents in 2009.

The country’s biggest opposition party, the Democratic Alliance (DA), asked President Jacob Zuma to use the latest funding as leverage to force President Mugabe to implement reforms promised in his power sharing agreement.
South Africa last year agreed to extend a $355 million loan to Swaziland, which was tied to political reforms.

Last month, Botswana extended $462.4 million in lines of credit to Zimbabwe as part of regional efforts to help the country’s battered economy to recover.

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