SOUTH AFRICA TO OFFER CREDIT FACILITIES TO ZIMBABWE


South Africa is considering opening a credit line to help neighbour Zimbabwe rebuild its shattered economy after years of political and economic crisis, the Financial Mail reported on Friday.

It quoted Finance Minister Trevor Manuel as saying a credit line made sense given that most of the goods needed to restock bare stores in Zimbabwe would be bought in South Africa.

“We will look at the credit facility. There is an old (Reserve Bank) credit line from 1967 that goes back to (Rhodesia’s) unilateral declaration of independence, and we are exploring using that,” he said in an interview.

While a credit line will not solve the country’s funding problems, it will allow private banks to lend money to wholesalers, retailers and producers to purchase goods using credit, and ultimately give millions of poor Zimbabweans easier access to essential products.

Zimbabwe has estimated it needs $1 billion now to get farms, schools and hospitals working, and another $5 billion later to fully rebuild the economy.

A new power-sharing government has raised hopes of an end to an economic meltdown in the once prosperous southern African country where inflation was last calculated in mid-2008 at 231 million percent, and a cholera epidemic has infected more than 80,000 people.

Food and fuel are scarce and the currency virtually worthless, leading to widespread use of the U.S. dollar and South African rand.

The Financial Mail said officials would not be drawn on the details of discussions, but analysts said a credit line was likely to have negligible impact on South Africa’s reserves and sovereign credit ratings.

SOURCED FROM REUTERS

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