World Bank nudged SA to bail out Zimbabwe

News and Press Release
Originally published
HARARE - World Bank President Paul Wolfowitz last month asked South African President Thabo Mbkei to consider financially bailing out Zimbabwe to underpin stability in a region still recovering from years of civil war in Angola and Mozambique, authoritative sources said on Tuesday.

The sources in Harare and Pretoria said Wolfowitz, who visited South Africa last month, told Mbeki on June 18 to act to save Zimbabwe because its collapse would hurt the region, especially South Africa which is already hosting thousands of Zimbabweans who have sought economic refuge there.

The sources said although the international community wanted President Robert Mugabe out of power to pave way for a solution to Zimbabwe's crisis, they did not want the southern African nation to collapse under the weight of food, fuel and hard cash shortages, into another Somalia.

"When the new World Bank President Mr Wolfowitz visited South Africa last month, he did indicate to President Mbeki that Zimbabwe's situation was getting worse and that South Africa had to intervene because it would suffer the consequences of a troubled neighbour," a well-placed source in Pretoria following the issue said.

"So it was then that South Africa started the initiative that the media has caught up with now," he added.

The official was referring to Press reports, later confirmed by Mbeki last Sunday, that South Africa and Zimbabwe were in talks over a possible US$1 billion loan to Harare.

A top Zimbabwe government official, who declined to be named, told ZimOnline that "the initiative did not come from our side, contrary to what has been presented as fact by the media."

The official said Harare had in actual fact asked for US$1.4 billion from South Africa, more than the US$1 billion that has been reported in recent days. Zimbabwe wants part of the money to pay off debts with the International Monetary Fund (IMF) which stood at US$209 million by the end of June.

It was not possible to immediately get official comment from Pretoria and Harare on the latest revelation on the proposed financial rescue package for Zimbabwe.

According to the sources, Wolfowitz told Mbeki that he was worried by the consequences of Zimbabwe being ejected from the IMF as remaining a member would help the country in its future economic recovery.

Mbeki at the weekend said it was critical that Zimbabwe remained a member of the IMF and indicated that Pretoria was also considering helping Harare settle outstanding debts with the Fund.

Officials in Washington yesterday said the IMF board would meet on August 5, and would among other things discuss Zimbabwe's continued stay in the Bretton Woods institution before making a decision on whether to expel the country.

The former Czechoslovakia was the only country to have been expelled from the IMF in 1954. The board itself cannot throw out Zimbabwe as only the board of governors, which includes finance ministers and central bankers, can do so during its twice-a-year IMF/World Bank meetings.

Central bank governor Gideon Gono last week said the country had increased its quarterly payments to the IMF from US$5 million to US$9 million and has promised to increase the payments in a bid to avert expulsion.

Zimbabwe desperately needs hard cash to import food or a quarter of its about 12 million people could starve after poor harvests last farming season. Foreign currency is also badly needed to pay for oil supplies among other basic commodities in short supply in the country.

Mugabe is this week in China also seeking funding to keep Zimbabwe afloat. - ZimOnline