Zim, China in $2bn loan talks :: Namibia Internet Gateway cc ::

Articles: Zim, China in $2bn loan talks

Posted by admin on Tuesday, December 26, 2006 - 04:53 PM

22/12/2006 10:28 - (SA)

Harare - Zimbabwe will soon open negotiations with China for a $2bn loan as part of efforts to stabilise its imploding economy, the official Herald newspaper reported on Friday.

"China's government is ready to negotiate with the government for a $2bn facility to fight inflation and other aspects of the economy," Chris Mutsvangwa, Zimbabwe's ambassador to China, was quoted as saying by the newspaper. This would be the largest foreign loan for President Robert Mugabe's government, which is presiding over its worst economic crisis since independence from Britain in 1980. Mutsvangwa said the Chinese government has appointed a projects officer to handle the issue and start talks with Zimbabwe's finance minister and central bank governor. Last month Mutsvangwa said a Chinese company had offered $3bn for a 60% stake in the country's struggling state-owned steelworks Zimbabwe Iron and Steel Company. His revelation was met with scepticism in Zimbabwe and China Metallurgical Group Corp, the company in question, denied making such a bid, although it said it had been approached by Harare. Mugabe's government has launched a "Look East" policy to attract investment and loans from Asian and Muslim countries after a fall-out with the West over policies such as the seizures of white-owned commercial farms for blacks. The central bank this year unveiled a $200m loan from China to help boost production in the key agriculture sector, whose demise critics blame on the land seizures. Zimbabwe's economy has contracted by 40 percent in real terms in the last six years, marking a recession dramatised by the highest inflation in the world at 1 098.8%, shortages of foreign currency, food and fuel, rocketing unemployment and deepening poverty levels. "He (Mutsvangwa) said China's assistance to Zimbabwe would help dispel the myth perpetuated by the United States and Europe that the country's economy has collapsed beyond redemption," the paper said. Mugabe denies critics charges that his policies have wrecked a once-thriving economy and accuses Britain of leading a Western campaign of sabotage to punish his government for the land reforms. He says the economy has now turned a corner.

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