Libya plans to rescue regime with US$2 billion loan

By Tichaona Sibanda
5 July 2007

The isolated regime in the country is negotiating a US$2 billion loan with Libya to help stabilise the crisis-hit economy, according to the Financial Gazette.

Government sources told the weekly newspaper that the loan deal was discussed during Robert Mugabe’s trip to Tripoli last month where he met with the Libyan leader Muammar Gaddafi.

The paper reports that Information Minister Sikhanyiso Ndlovu told them he did not have the ‘full details’ of the negotiations, and referred questions to Finance Minister Samuel Mumbengegwi who said he knew nothing of the deal.

Although the terms of the loan deal with Libya are not yet known, analysts say this is a campaign by Gaddafi to buy support from other African Heads of State to push for his United States of Africa vision.

‘While it may look like political suicide by Gaddafi to throw away US$2 billion to Mugabe, he’s in fact buying favours knowing the support he has among many African leaders. This deal has all to do with Gaddafi wanting to rule a united Africa but its impossible because the continent is so fractured with too many different social and cultural backgrounds,’ Dziya said.

In 2002, the regime received oil from Libya under a US$360 million loan facility that was to be repaid partly by the supply of farm produce to Tripoli. But the deal collapsed after the country failed to meet its side of the bargain.
The oil deal, which covered 70 percent of Zimbabwe's fuel needs at the time, had run for less than a year at the time it was ended.

Desperate to salvage the facility, in 2003 Zimbabwe attempted but later abandoned a plan to export US$100 million worth of agricultural commodities to Libya. That deal involved the Libyan Arab Foreign Bank, the Libyan Arab Investment Company and Libya's state oil company, Tamoil.