Economic rescue package

Details of South Africa's pledge two weeks ago to bail out Zimbabwe's struggling economy are beginning to unfold.

South African newspapers reported over the weekend that Zimbabwe would issue a bond in which South Africa would invest US $133 million to stave off fuel and power shortages that have hit Zimbabwe since December.

The parastatal oil-from-coal company, SASOL, is expected to sign an exclusive contract to supply fuel to Zimbabwe in the next few days, according to the reports.

Quoting a SASOL spokesman, 'Business Report' said SASOL was approached by the government of President Robert Mugabe and officials of the National Oil Company of Zimbabwe (NOCZIM) last year. "They want us to supply all their fuel requirements - petrol, diesel, jet fuel and liquid petroleum gas," the
spokesman said.

The possibility of South Africa advancing a loan to rescue Zimbabwe's economy was discussed in Harare two weeks ago when President Thabo Mbeki led a ministerial delegation that met with Mugabe and his ministers.

Following the six-hour meeting, Zimbabwe's Commerce and Industry Minister Nathan Shamuyarira told journalists that South Africa had pledged a rescue package of US $133 million to cash-strapped Zimbabwe.

Analysts said South Africa's involvement in efforts to prop up Zimbabwe's economy are prompted by the fact that Zimbabwe is South Africa's biggest importer of its products in Africa. In 1998 alone, said the analysts, Zimbabwe imported goods valued at US $1 billion from South Africa.

Analysts said Zimbabwe's foreign currency shortage situation is worsened by the lack of international donor support. The International Monetary Fund (IMF) and the World Bank withdrew their support to the country after it failed to meet set targets last September.

Zimbabwe, according to 1998 figures, has accumulated a foreign debt of US $4.5 billion. Of this debt, the government is responsible for US $3.1 billion while the parastatals owe US $515 million with the private sector accounting for US $192 million.