SOUTH Africa has agreed to consider extending a line of credit and providing further budget support to Zimbabwe’s government, after a meeting on Friday between Finance Minister Pravin Gordhan and his Zimbabwean counterpart Tendai Biti.
In a joint statement, the ministers said that Zimbabwe continued to face "significant economic constraints" including cash-flow challenges arising from revenue collections that were below target, a high debt overhang, an uncompetitive business environment, infrastructure deficits and limited access to lines of credit for business.
Zimbabwe’s reform measures were acknowledged, including an increase in fuel taxes, closing tax loopholes and slippages, strengthening the budget process, tightening financial market regulation and restructuring the balance sheet of the Reserve Bank of Zimbabwe.
"The ministers agreed to consider the following: the facilitation of a line of credit; a request for further budget support, which will be aligned to South Africa’s 2012 budget process," the statement said.
Treasury spokesman Jabulani Sikhakhane said no specific amounts of credit or budget support were being considered at this point.
"The discussion hasn’t got there yet, these are just broad principles," he told I-Net Bridge.
The Treasury will publish its medium-term budget on October 24.
South Africa "further committed itself to continue supporting" Zimbabwe’s efforts to normalise its relations with multilateral financial institutions, the statement said.