April 30, 2009 / 12:27 PM / 10 years ago

INTERVIEW-Zimbabwe confirms $400 mln credit from Africa

* Funds for "critical" industries

* Finmin plans July budget review

* Biti says expects substantial donor aid "soon"

* Concedes Zimbabwe must tackle its "toxic" issues

(Updates throughout with details, fresh quotes, background)

By Emelia Sithole-Matarise

LONDON, April 30 (Reuters) - Zimbabwe’s Finance Minister Tendai Biti confirmed on Thursday the country was receiving $400 million in credit lines from African states to revive its ailing industries, the first major financial package since a unity government was formed.

The funds will be made available to "critical" industries including food processing and fertiliser companies, he told Reuters during a visit to London.

"COMESA (Common Market for Eastern and Southern Africa) has provided a line of credit and so have Botswana and South Africa and that brings the line of credit to $400 million," Biti said.

"Botswana is giving us $70 million and South Africa is giving us $50 million and COMESA is giving us the bulk of the amount."

State media reported on Wednesday that the southern African country had secured $400 million in credit lines to help the local economy recover from years of economic contraction and hyper-inflation.

A unity government formed by rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai has appealed for billions of dollars from the West.

Asked when Zimbabwe was expecting substantial aid from Western governments, Biti said it would come "soon".


Western donors, who are expected to provide the bulk of funding for Zimbabwe’s economic recovery, have demanded broad economic and political reforms, including ending a new wave of farm invasions targeting the few remaining white farmers.

Biti, a senior official with Tsvangirai’s Movement for Democratic Change (MDC), said there was commitment from Western donors to help Zimbabwe but conceded this hinged on the unity government dealing with what he termed its "toxic" issues.

"There are doubts and challenges on political governance and that’s what we have to work on," Biti said.

"The international community and our friends must understand that we have decided to give our people a chance by this experiment. They too must give our people a chance by supporting this experiment."

He urged Tsvangirai and Mugabe to resolve these issues quickly, including the contentious appointments of Reserve Bank Governor Gideon Gono for a second five-year term, saying as long as they dragged on they perpetuated a perception that "Mugabe cannot be trusted and that he is taking the MDC for a ride".

Critics blame Mugabe and Gono for bringing Zimbabwe’s once-prosperous economy to its knees through reckless policies.

Biti also said he planned a budget review in July to take into account incoming donor funds and progress made to control hyperinflation after the new government ditched worthless local money and allowed the use of hard currency.

Latest official figures showed consumer inflation at -3 percent month-on-month in March compared to -3.1 percent in February. Previous figures showed inflation at 231 million percent in July, but economists said it rose far higher.

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