Cash crunch - Zimbabwe turns to SA
07 September 2012, 08:13
Harare - Zimbabwe is turning to South Africa and Angola for help in plugging a $400m hole in its budget, Finance Minister Tendai Biti said on Thursday, lamenting a lack of foreign investment and aid from its traditional Western donors.
The southern African country's economy is recovering under a coalition government formed in 2009 by President Robert Mugabe and his rival, Prime Minister Morgan Tsvangirai, but is still suffering the hangover of a decade-long recession widely blamed on Mugabe policies such as the seizure of white-owned farms.
Biti, who slashed Zimbabwe's 2012 GDP growth forecast last month from 9.4% to 5.6% due to a poor harvest and lack of donor funding, said Harare would seek at least $150m from South Africa and Angola.
"I have secured an important appointment with South Africa's minister of finance two weeks from now," he told a news conference. "In this meeting we are going to make a request for budgetary support to the tune of $100m."
Harare was also in advanced talks for a $50m credit line from oil-rich Angola, he said.
He added that he would ask Pretoria to release a R500m ($59m) grant pledged in 2009, and revive a R1.75bn credit facility created decades ago by the colonial Rhodesian government and apartheid South Africa.
The government needed nearly $400m before the end of the year to pay annual bonuses for workers, and to finance the 2012/2013 farming season and an expected referendum on a new constitution, Biti said.
Zimbabwe has struggled to attract funding from the likes of the IMF and World Bank due to external debt that Biti put at $9.1bn. Mugabe's drive to force foreign firms to hand over majority shares to local interests has also kept private investors away.
Zimbabwe was in danger of missing a revenue target of $3.4bn this year, Biti said, but added that the revised growth forecast would be met due to better-than-expected tobacco sales.
Biti also said Harare was negotiating with Beijing for a $350m loan to expand its Kariba South power station to provide an additional 300MW of power to the current 1 000MW - half of present demand.
China's Sino Hydro is the sole bidder for the project.
Speaking earlier in Harare at the launch of an energy policy, Energy Minister Elton Mangoma said Zimbabwe was planning a 100MW solar plant to be commissioned in 2013.