Pretoria: The facilitation of a credit line was among the issues considered at a meeting between South Africa’s Finance Minister Pravin Gordhan and Zimbabwean Finance Minister Tendai Biti. In a joint statement following a meeting on Friday, the ministers discussed ways of deepening cooperation between the governments of South Africa and Zimbabwe.
“The discussions centred on the resolution of the Extraordinary Summit of the SADC Heads of State and Government held at the Lozitha Palace, Kingdom of Swaziland, on 30 March 2009, to provide support to Zimbabwe’s Short Term Economic Recovery Programme (STERP),” they said in the joint release.
At the summit South Africa pledged to explore a number of possible support measures for Zimbabwe, including: budget support grants; a line of credit; and export credit facilities. Gordhan and Biti recognised Zimbabwe’s positive recovery from a period of hyper-inflation and the successful implementation of STERP.
However, they noted that Zimbabwe continued to face significant economic constraints, including cash flow challenges arising from revenue collections that are below target, a high debt over-hang, an uncompetitive business environment, infrastructural deficits, and limited access to lines of credit for business.
The ministers also acknowledged the reform measures that Zimbabwe has been undertaking to achieve fiscal sustainability and overall economic recovery.
measures included continued restructuring of the balance sheet of the Reserve Bank of Zimbabwe and revenue enhancing measures, including an increase in fuel taxes, coupled with the incorporation of the Zimbabwean Revenue Authority (ZIMRA) into the diamond value chain, as well as closing tax loopholes and slippages.
The finance ministers agreed to consider the facilitation of a line of credit; a request for further budget support, which will be aligned to South Africa’s 2012 budget process as well as encouraging the participation of development finance institutions, including the DBSA, to invest in infrastructure projects, particularly in energy and roads among others.
“South Africa further committed itself to continue supporting Zimbabwe’s efforts to normalise its relations with multilateral financial institutions.” Earlier this month, National Treasury announced that the meeting was to take place later this month.