Zimbabwe loan amount "nowhere near" a billion

By Tererai Karimakwenda
25 August 2005

Addressing reporters after giving the central bank's annual economic report on Wednesday, South Africa Reserve Bank governor Tito Mboweni said that ongoing talks about a loan to Zimbabwe involved an amount "nowhere near" the reported $1-billion. The talks involve Mboweni, Finance Minister Trevor Manuel and their Zimbabwean counterparts Gideon Gono and Herbert Murerwa.

Mboweni said there was a media frenzy surrounding the loan, and confirmed the discussions were not yet concluded. As for any conditions attached to it, he told reporters in Pretoria there is discussion centred around what policies need to be implemented by Zimbabwe to help boost economic performance. According to Mboweni, what to do to avoid the possible expulsion of Zimbabwe from the International Monetary Fund was the most important issue in the discussions. Reports say he then declined to answer any further questions on Zimbabwe.

Andrea Bohnstedt, who analyses economics in Africa for Global Insight, says a one-off loan to Zimbabwe is simply a stop-gap measure. She believes the economic crisis is just an expression of political instability in a country where the ruling elite are clinging onto power. This reinforces the economic decline even further. Bohnstedt says political change is necessary and South Africa will have to ask for many reforms and economic policies that will stabilise the situation.

As for the IMF team currently in Zimbabwe, Bohnstedt says their presence shows that they are willing to negotiate even though they have threatened Zimbabwe with expulsion at least 3 times. If they see a willingness to go along with certain policies and reforms, they might be more reasonable and withhold expulsion.