Zim comes begging, again

2012-09-22 19:28

Some of the money will be used for paying workers’ end of year bonuses

South Africa has agreed to extend a helping hand to Zimbabwe to kick-start its economy, but there will be no political conditions attached to the assistance.

At a meeting between the finance ministers of the two nations, South Africa agreed to help its northern neighbour with direct cash injections, a credit line and export credit facilities.

Treasury spokesperson Jabulani Sikhakhane told City Press that there will be no political dimension to this agreement as was the case with Swaziland, where South Africa wanted to extend a loan to the cash-strapped monarchy on condition that it implemented political reforms.

Zimbabwe’s finance minister Tendai Biti said earlier this month he is taking the begging bowl to South Africa and Angola after he downgraded the forecast for economic growth in his nation from 9.4% to 5.6%.

Despite various trade conferences in South Africa and other nations, Zimbabwe hasn’t been able to attract large-scale investment since the formation of the government of national unity (GNU).

After the GNU was formed, President Robert Mugabe promptly put the responsibility for finance in the hands of ministers from the Movement for Democratic Change, while the Zanu-PF ministers took charge of the security, intelligence and mining ministries.

Biti has previously complained that there is a massive gap between the diamonds mined at Marange diamond fields and the income that enters the fiscus.

During his budget speech in July, Biti said he had to cut the state’s budget from $4 billion (R33 billion) to $3.4 billion because of the poor revenues from the Marange diamonds.

He said he had expected to get $600 million from diamond sales, but only $41.6 million was received by June.

“We thought by June about half of the amount would have been achieved. I am very worried about the amount coming from diamond sales, which is way below what we anticipated. It is a very worrying situation,” Biti said at the time.

Although officials who attended the meeting between Biti and his South African counterpart Pravin Gordhan said there were no numbers discussed, Biti told reporters in Harare earlier this month that he would ask for $100 million to help plug the $400-million hole in his government’s budget.

He added that they will ask Pretoria to revive a credit facility of R1.75 billion that was created between the former Rhodesia administration and the apartheid government.

Zimbabwe is also asking for a $50-million credit line from oil-rich Angola, Biti confirmed.

The new money would be used for paying workers’ end-of-year bonuses, preparing for the next farming season and funding the country’s upcoming referendum.

Zimbabwe owes foreign countries up to $9.1 billion.

In June, the GNU government defaulted on a $200-million loan from China that was used to support farmers, but the farmers had also not repaid the government.

Biti added that Harare was negotiating with Beijing to secure a $350-million loan to expand its Kariba South power station.

This to provide an additional 300MW of power to the current 1 000MW – half of the present demand.

Gordhan said South Africa will also “encourage” the Development Bank of Southern Africa to invest in Zimbabwean infrastructure projects, focusing mostly on energy and roads.

He vowed to help Zimbabwe in its strained relations with the world’s financing institutions.

South African officials and its revenue service will also help ease the custom problems at the Beitbridge border to ensure easier movement of goods.

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