South Africa promises support

In continuing steps by South Africa to support its financially-embattled neighbour, the government has announced it will work with Zimbabwe to improve its troubled relationship with the International Monetary Fund.

South African Department of Finance Director-General Maria Ramos reportedly said on Tuesday that Zimbabwe faced significant challenges in getting its economy back on track, but South African officials would work with their Zimbabwean counterparts once a new government was formed following last month’s parliamentary elections. Speaking to the British-South African Chamber of Business in Johannesburg, she said Zimbabwe had the potential to be a “vibrant growing economy”.

The IMF last year suspended part of a US $193 million balance of payments support programme for Zimbabwe citing the failure of the government to stick to its economic recovery plans. The IMF’s new boss Horst Koehler said on South African television at the weekend that Zimbabwe “must show that they are serious about economic recovery” before the IMF resumes assistance.

Government policy reversals and a withdrawal of donor financial support has left Zimbabwe’s economy badly bruised. Its fiscal targets set in 1999 have been blown off course, with inflation hovering at between 50 and 60 percent, a widening budget deficit, and an overvalued currency that is crippling business. A critical foreign exchange shortage has also forced it to rely on fuel and power supplies from South Africa.

South Africa views stability in Zimbabwe, its main trading partner in Africa, as a regional security issue. “I don’t see South Africa wanting to bolster (President Robert) Mugabe but wanting to create the conditions for the emergence of a stable democracy,” a researcher at the South African Institute for International Affairs told IRIN. “Positive things aren’t going to happen until the economy gets a bit better.”