Zimbabwe looking for $2-billion bailout package

The once prosperous Zimbabwe is now in dire straits and is looking for a white knight to bail the country out of the present turmoil even as donor nations, especially western powers, root for a democratic government and economic reforms before pouring cash in.

The new unity government of cash-strapped Zimbabwe is looking for emergency aid after slashing its estimate for this year's revenue by nearly half. With no sign of much needed foreign aid and investment coming, Zimbabwe's new finance minister also halved spending plans.

Zimbabwe slashed its 2009 budget to $1 billion from $1.7 billion as the country struggled with 90 per cent unemployment, hyperinflation and shortages of basic goods.

Zimbabwe, meanwhile, started talks with South Africa for a financial assistance package, according to media reports. Zimbabwe is reported to have sought up to $2 billion in aid over the short term. It is, however, unclear if the aid will be coming from South Africa or from the Southern Africa Union.

Speaking after the third session of the Zimbabwe-South Africa joint permanent commission meeting in Victoria Falls on Monday, South African foreign minister Nkosazana Dlamini-Zuma said his government is looking at a financial rescue proposal for Harare.

Reports said South Africa is advancing 60 million rand for purchase of agricultural materials while it gave  another Rand 300 million for farming inputs last year.

Zimbabwe's finance minister Tendai Biti announced a revision of the state budget and said the government was unable to even revise the meager $100 it pays as monthly allowances to civil servants.

Biti said the country's revenue had come down to $25 million in February and $30 million in March, against projections of $140 million per month as unemployment zoomed and businesses collapsed.

"We are embarking on the basic law of cash budgeting. No ministry or public agency or parastatal should expect to spend beyond what we have collected," said Biti.

"The outlook of our economic situation is still grim, but I have no doubt that we will be able to achieve the turnaround we require," he said.

The revenue fall will affect government's efforts to restore services meant for the poor – medical supplies to dilapidated hospitals, rebuilding of schools and infrastructure will be hit hard.

The unity government of President Robert Mugabe and Prime Minister Morgan Tsvangirai is expected to launch a short-term economic recovery plan, focusing on the humanitarian crisis and agriculture, manufacturing and mining.

While Mugabe blames Western sanctions for Zimbabwe's woes, critics say it was caused by Mugabe's reckless policies.

The crisis, however, may help promote democratic, constitutional reforms and greater media and other freedoms demanded by western powers crucial to Zimbabwe's rebuilding.