SA's Zim aid package won't affect budget - Motlanthe

Friday, February 20, 2009

Parliament - President Kgalema Motlanthe says a financial aid package to Zimbabwe to help reconstruction in that country will not affect South Africa's budget.

The President was speaking after a South African delegation met with Zimbabwe's newly sworn in Prime Minister (PM) Morgan Tsvangirai as well as Zimbabwe's ministers of foreign affairs and finance.

The President however said that an exact figure on the aid could not be given until the needs and requirements for Zimbabwe was assessed at a meeting of finance ministers next week.

Today's meeting took place in Cape Town against the backdrop of the successful establishment of a government of national unity in which President Robert Mugabe would remain in his position, with Mr Tsvangirai as his prime minister and Dr Arthur Mutambara as the deputy prime minister.

In response to questions President Motlanthe said: "There are no [aid] figures to speak of at the moment.

"It will emerge next week what the exact needs and requirements are in Zimbabwe... [and] finance ministers will look at this issue next week."

The President highlighted that South Africa and other nations looking to rebuild Zimbabwe cannot adopt a sequential approach to the challenges that exist, but that a short term and long term plan was necessary.

The meeting next week of finance ministers will address all the challenges of the economic recovery of Zimbabwe, the president said, adding, however, that sanctions instituted against Zimbabwe needed to be removed so that trade with that country can resume.

"Many countries in the world including the European Union [EU] have sanctions in place against Zimbabwe, and we need to unlock these sanctions so that Zimbabwe can be treated as a normal country with which trade can be conducted," Mr Motlanthe told media.

On whether Zimbabwe would officially adopt the South African Rand as its currency, Prime Minister Tsvangirai said Zimbabwe will not adopt the Rand exclusively, but rather that a multi-currency denomination will be used.

"Our currency has been rendered almost worthless and so we will be using a multi-currency denomination including the US Dollar and the Rand, but this is a short term application until we can see whether the Zim Dollar can regain some worth," the prime minister said.

There are some 230 000 public servants in Zimbabwe which Mr Tsvangirai said would be paid in foreign currency as a type of allowance until the real value of the Zim Dollar could be re-established.

The new unity government, will as its first act to reconstruct Zimbabwe, implement a short term initiative to jump start the health and food situation in the country, with the long term initiative focussed squarely on economic recovery.

This economic recovery, the prime minister spoke of, could run into as much as $5 billion, Mr Tsvangirai estimated.

Allowing Foreign Direct Investment [FDI] in Zimbabwe was a crucial focus area for Zimbabwe and would be critical to the reconstruction of his country, the prime minister said.

Agricultural reform was also high on their agenda, Mr Tsvangirai said, with the establishment of Land Reform Commission that will deal with issues of land rights, agricultural revitalisation, security of tenure and input assistance.