Country seeks US$2 billion Libya loan

Mugabe

Financial Gazette (Harare)
4 July 2007

By Rangarirai Mberi
Harare

ZIMBABWE is negotiating a US$2 billion loan with Libya to help stabilise the country's crisis-hit economy, senior government sources revealed this week.

President Robert Mugabe held meetings last month with Libyan leader Muammar Gaddafi during a three-day visit to Tripoli, where, according to senior officials, the loan, whose details remained sketchy at the time of going to print, was discussed.

Information Minister Sikhanyiso Ndlovu said yesterday he did not have the "full details" of the negotiations, referring questions to Finance Minister Samuel Mumbengegwi.

Mumbengegwi said yesterday he "knew nothing about any such deal" and insisted he would not comment on whatever discussions the two leaders might have had.

Only the signing of a "joint permanent commission" was made public after the visit. It has been reported that a "trade and investment" delegation of Libyan businessman would soon visit Zimbabwe, but there is no indication as to whether the group's visit is linked to the terms of the loan.

But a senior government official said a deal with the Libyan leader was close.

"It's not likely there will be too much publicity around this, but there are talks, and we do anticipate something within a few weeks," the official said, declining to be named.

Officials declined to discuss details on the terms of the deal, but its confirmation will revive debate about what Libya would get in exchange for the loan.

Shunned by major western donors over his policies, particularly his drive to resettle landless black farmers on farmland historically dominated by the white minority, President Mugabe has turned elsewhere for aid and investment.

But he has struggled to secure solid support, hamstrung by Zimbabwe's inability to assure prospective Asian, and now Arab, financiers payment that can match the significant amounts of aid the country needs to stabilise the economy.

The terms of the loan deal with Libya are not yet known, but the North Africans would have negotiated cautiously given past experiences with Zimbabwe.

In 2002, Zimbabwe received oil from Libya under a US$360 million loan facility that was to be repaid partly by the supply of farm produce to Tripoli. But the deal collapsed after Zimbabwe failed to meet its side of the bargain.

The oil deal, which covered 70 percent of Zimbabwe's fuel needs at the time, had run for less than a year at the time it was ended.

Desperate to salvage the facility, in 2003 Zimbabwe attempted but later abandoned a plan to export US$100 million worth of agricultural commodities to Libya.

The deal had involved the Libyan Arab Foreign Bank, the Libyan Arab Investment Company and Libya's state oil company, Tamoil.

Zimbabwe has also previously discussed aid packages with South Africa.

In 2005, South Africa had agreed to negotiate a loan to Zimbabwe, but the deal fell through after Harare reportedly rejected conditions for economic and political reform that had been tied to the bail-out plan.

Reports at the time put the size of the proposed loan at US$1million, but South Africa's central bank governor Tito Mboweni said that figure was "exaggerated".