Zimbabwe: SA to bail-out Harare to avoid inheriting crisis - Mbeki

HARARE - South African President Thabo Mbeki on Sunday said his government was considering loaning Zimbabwe money for fear it could inherit a massive humanitarian crisis if its troubled northern neighbour collapsed.

Commenting publicly for the first time on reports that Zimbabwe had requested for a US$1 billion bailout, Mbeki said the proposed financial rescue package would also include assisting Harare settle its outstanding debts with the International Monetary Fund (IMF) to avoid expulsion.

Mbeki, who was addressing a media conference, also said Pretoria will discuss with the United Nations (UN) how to respond to Zimbabwe's latest humanitarian crisis triggered by a controversial urban clean-up campaign that left about 700 000 people in the streets without food or clean water.

"We engage them because we don't want Zimbabwe collapsing next door.... South Africa would inherit all the consequences of Zimbabwe collapsing," said Mbeki, considered by many to wield enough political and economic influence to pressure President Robert Mugabe to embrace democracy and to abandon his controversial policies.

The South African leader confirmed Press reports that his Finance Minister, Trevor Manuel and South African Reserve Bank governor, Tito Mboweni, had met Zimbabwe officials for loan talks.

Mbeki said his government was looking at a rescue package that would benefit all Zimbabweans, adding that once there was a "good sense" of the outcome of ongoing negotiations, Pretoria would also consult Zimbabwe's main opposition Movement for Democratic Change (MDC) party.

Zimbabwe, grappling its worst economic crisis since independence from Britain 25 years ago, wants hard cash from South Africa to ease food and fuel shortages threatening to bring the crisis-sapped country to a complete halt.

Mugabe and his top officials are this week scheduled to hold talks with Chinese leaders also to ask for financial assistance.

Mbeki said Pretoria was not only looking at helping Zimbabwe surmount immediate problems saying any economic assistance provided by his government would aim at addressing "the totality of the Zimbabwean economy."

It was also crucial to ensure Zimbabwe was not expelled by the IMF for nonpayment of debt. "It (IMF expulsion) creates a bigger problem that is going to require bigger resources to solve," Mbeki said.

"Our own view is that indeed it is important to address those arrears so that Zimbabwe continues to have the possibility to access the IMF in terms of what it has to do in regard to its economy. Quite how that will be done is part of what is under discussion," he added.

The IMF cut financial assistance to Zimbabwe six years ago after disagreeing with Mugabe on fiscal policy and other governance issues.

The board of the IMF is widely expected to vote to expel Zimbabwe when it meets next month, a move that analysts say would be the last signal to other multilateral institutions, development agencies and donor groups to cut off whatever little aid is still trickling to Harare.

Reacting to a UN report on the Zimbabwe government's controversial urban slum clearance campaign, Mbeki said South Africa would discuss with the world body on possible solutions to humanitarian problems caused by the clean-up campaign.

"We will engage the UN itself to say what programmes do they propose to respond to their own recommendations," said Mbeki.

The South African government will meet South African Council of Churches leaders, who have visited Zimbabwe to assess humanitarian needs there, to work out a relief plan for the country, Mbeki said. - ZimOnline