Zimbabwe, SA bank governors discuss rescue package

News and Press Release
Originally published
HARARE -- Reserve Bank of Zimbabwe governor Gideon Gono last Friday met his South African Reserve Bank counterpart, Tito Mboweni, in Pretoria to hammer out details of a possible US$1 billion rescue package for Zimbabwe.
The visit by Gono was a follow-up to talks between South African Deputy President Phumzile Mlambo-Ngcuka and President Robert Mugabe in Harare last week.

Mlambo-Ngcuka, who was accompanied by her country's deputy finance minister Jabulani Moleketi, is said to have told Mugabe to halt his controversial urban clean-up drive before funds could be made available.

Both Gono and Mboweni could not be reached for comment on the matter last night. But Pretoria's communications chief, Joel Netshitenzhe, yesterday would not confirm or deny during an interview with South Africa's SAfm radio whether there had been meetings to discuss a possible US$1 billion loan to Harare.

Netshitenzhe however added that the issue of a possible South African loan to Zimbabwe "would need to be placed before Parliament" first before any agreements could be concluded.

Mugabe and his government urgently need hard cash to import food, fuel and electricity and avert a total collapse of Zimbabwe that has in the past six years, miraculously survived crisis after crisis.

A meeting between South African Foreign Minister Nkosazana Dlamini-Zuma and her Zimbabwean counterpart, Simbarashe Mumbengegwi, that had been scheduled for yesterday as a follow up on Gono and Mboweni's talks was postponed because Dlamini-Zuma is away.

According to sources, Gono assured Mboweni that Harare would among other things reconsider its clean-up exercise as well as repressive media laws, all issues that have drawn criticism from major Western governments and rights groups.

"The Zimbabwean delegation sought to assure their South African colleagues that Harare was willing to reconsider its crackdown on shantytowns as well as its repressive media legislation, to smoothen the way for financial help from Pretoria," said a source privy to the discussions between Gono and Mboweni.

The meeting between South Africa and Zimbabwe central bank chiefs was followed by an announcement by Harare later on Friday that it was temporarily halting its clean-up exercise.

It could not be immediately ascertained whether South Africa will give Zimbabwe the US$1 billion it has asked for or it will only provide part of the money.

Zimbabwe, grappling a severe hard cash crisis since the International Monetary Fund (IMF) suspended balance-of-payments support six years ago, requires at least US$250 million to import 1.2 million tonnes of food or a quarter of its 12 million people could starve.

The southern African nation also requires at least US$40 million a month to import fuel, currently in critical short supply in the country.

The IMF board is tomorrow expected to decide whether to expel Zimbabwe for failure to repay debt, in what analysts say would be the last signal to other multilateral institutions, development agencies and donor groups to cut whatever little aid and financial support still trickling to Harare.