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HARARE, June 12 (Reuters) - The European Investment Bank is considering extending loans to Zimbabwe's private sector, more than a decade after the European Union slapped sanctions on Robert Mugabe's government over charges of human rights abuses and vote rigging.
The bank will not lend directly to the government until the issue of more than 300 million euros in outstanding arrears is resolved, EIB head for the African, Caribbean and Pacific region (ACP) Diederick Zambon said on Thursday.
Zambon declined to say how much the loans would be worth, but told journalists the EIB would meet local banks and businesses to discuss their financial needs. It would also discuss the arrears with the finance ministry.
"The way we would like to return in the country, and where we see our role, is for the moment with the private sector," Zambon said. "We will work through banks and that reinforces the financial sector, which is in need of reinforcement."
The European Investment Bank is owned by EU member states and provides 1.5 billion euros in new loans every year to ACP countries.
The World Bank, International Monetary Fund and traditional Western donors have withheld support to Zimbabwe since 1999 and the southern African country is saddled with around $10 billion in foreign debt.
Relations with the EU have however thawed in the last few years, despite a dispute over a national election won by Mugabe's ZANU-PF party last July. The bloc has removed all Zimbabweans except the veteran leader and his wife from its sanctions list.
The EU, which has for years preferred to work with charities in Zimbabwe, is expected to hold a meeting in November that could pave way for directly channelling development aid to the government from 2015. (Reporting by MacDonald Dzirutwe; Editing by Stella Mapenzauswa)