After more than a week of violence, South Africa is now planning to offer economic help to Zimbabwe.
Speaking to the Daily Maverick, finance minister Tito Mboweni said that South Africa is planning to extend short-term credit to Zimbabwe and also to help it write off its $7.4-billion external debt.
While Mboweni did not mention specific numbers, he indicated that the two governments were still discussing how to work together to settle Zimbabwe’s debt to the IMF, World Bank and the Paris Club.
In addition to discussing ways of helping Zimbabwe lift its debt to international creditors, Mboweni said South Africa and Zimbabwe were also discussing the possibility of South Africa extending an existing credit facility just short of R100 million which Zimbabwe had with the South African Reserve Bank.
The finance minister said that Zimbabwe had previously provided collateral for this loan in the form of its holding of SA Land Bank bills and had always repaid its loans under this facility in the past.
Thousands of Zimbabweans barricaded roads and torched some government property last week after the Zimbabwe Congress of Trade Unions called a strike to protest the state’s doubling of fuel prices. The increase will add to inflation that’s already at the highest rate in a decade, amid a shortage of raw materials and cash.
Security forces responded to the demonstrations with live ammunition, rubber bullets and tear gas while the government twice shut down the Internet to stem the flow of information.
According to Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions, while the the violent protests taking place in Zimbabwe is not affecting the local currency market, South Africa will likely be affected over time.
“Fears of a spillover and an additional rush of migrants are some of the top concerns from a socio-economic perspective that could further strain the already weak local economy,” she said.