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South Africa to lend $100mn to Zimbabwe
April 15, 2013, 2:43 pm

[Getty Images]

A poor farming season has continued to weigh on the budget, says Zimbabwe’s finance minister [Getty Images]

In a major relief to Zimbabwe’s economy, South Africa has approved $100 million in budgetary support to the ailing finances of the country, finance minister Tendai Biti said on Monday.

Zimbabwe’s sovereign currency ceased to exist in February 2009 marking a severe economic crisis, replaced by a multi-currency financial system using the US dollar, Botswana pula and the South African rand.

“Pursuant to discussions in September 2012, I’m aware the South African cabinet has made a decision and it’s a positive decision,” Biti told a news conference.

Zimbabwe’s minister of economic planning and investment promotion, Dr Tapiwa Mashakada, had said earlier last week: “South Africa continues to be Zimbabwe’s main trading partner, accounting for more than 60 per cent of the country’s international trade volumes.”

Biti said he had also made an additional plea to South Africa and Angola to fund elections expected later this year.

“It is self-evident that the Treasury has no capacity to fund elections. We’re not going to borrow again for the elections,” he said, repeating his call for foreign funding for polls which have an initial budget of $132 million.

Zimbabwe has also appealed to the United Nations for election funding.

Last year Zimbabwe asked African neighbours South Africa and Angola for $150 million.

Official reports from the investment authority also show that South Africa contributed close to 55 per cent of the FDI approvals by December 2012 in Zimbabwe.

A poor farming season and lower-than-expected diamond revenues from the government’s Marange fields continued to weigh on the budget, Biti said.

Zimbabwe would import 150,000 tonnes of maize, mostly from Zambia and South Africa, Biti said, but the bulk of purchases would be by private millers and not the government.

Zimbabwe has been without balance of payment support since 1999 after the International Monetary Fund and donors withdrew financial aid over policy differences.

The EU has been gradually easing its sanctions against Zimbabwe as part of a strategy to encourage political reform after 33 years of President Robert Mugabe’s rule.

With inputs from Agencies

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