China to spend $2 billion to rescue Zimbabwe

Section:

Zimbabwe, China Negotiate $2 Billion Loan

From Agence France-Presse
Friday, December 22, 2006

http://news.yahoo.com/s/afp/20061222/bs_afp/zimbabwechinaeconomyaid_0612...

Zimbabwe and China are expected to begin negotiations for a two-billion US dollar loan agreement to help stabilise the economy, a state-run daily reported.

"China's government is ready to negotiate with the government (of Zimbabwe) for a two-billion US dollars loan facility to help it fight inflation and other aspects of the economy," Zimbabwe's Ambassador to China, Chris Mutsvangwa, told the Herald newspaper.

The daily said the Chinese government had appointed a project officer to handle the negotiations who would soon open talks with Zimbabwe's Finance Minister Herbert Murerwa and central bank governor Gideon Gono.

Mutsvangwa made the remarks in Harare at a ceremony at which the Chinese government handed over more than 22,000 metric tonnes of compound D fertilizer that will be used to help revive Zimbabwe's ailing agricultural sector.

China's assistance to Zimbabwe would help dispel the myth perpetuated by the United States and Europe that Zimbabwe's economy had collapsed beyond redemption, Mutsvangwsa said.

Speaking at the same event, Vice President Joyce Mujuru commended the Chinese government for its concerted efforts and support aimed at stabilising Zimbabwe.

"The support being extended to us by the People's Republic of China is critical as it comes at a time when we have embarked on an agricultural revival programme," she said.

"The timely delivery of agricultural inputs and good rains we are receiving will ensure the achievement of the projected growth rate of 9.4 percent in the agricultural sector in 2007."

Isolated by Western governments over the political crisis in Zimbabwe, President Robert Mugabe's government has looked to foster new relations with Asian countries such as China and Malaysia as part of a so-called "Look East" policy.

But despite a stream of high-profile agreements with its new allies, Zimbabwe has so far been unable to revive its ailing economy.

Inflation is currently running at 1,098 percent and unemployment is believed to have passed the 70 percent mark. Food staples such as bread and cooking oil are now in short supply in a country that was regarded as southern Africa's bread basket little more than a decade ago.

In August last year, reports claimed that South Africa had agreed to lend up to 500 million dollars to Zimbabwe on condition that its troubled neighbour agree to reforms to bolster stability. The money however never materialised.

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