21 Feb 2009

Zimbabwe's repair package 'may cost $5bn'

1:06 pm on 21 February 2009

Repairing Zimbabwe's economy could cost as much as $US5 billion and foreign direct investment would help, Prime Minister Morgan Tsvangirai says.

The Reserve Bank of Zimbabwe said international and regional financiers had offered Zimbabwe $500 million in credit lines, but were cautious because of conflicting signals on policy.

Zimbabwe's government, formed between Tsvangirai's MDC party and President Robert Mugabe's Zanu-PF, must resolve an economic meltdown that has led to hyperinflation and a virtually worthless local currency. Prices double every day.

After meeting South African President Kgalema Motlanthe and Finance Minister Trevor Manuel to discuss a recovery strategy, Mr Tsvangirai said Zimbabwe planned to use a number of currencies but was not considering adopting the rand as legal tender.

"As for the long-term economic recovery it has not been assessed ... but I think it would run into billions of dollars, maybe as high as $5 billon," Mr Tsvangirai said at a news conference in Cape Town.

Zimbabwe's economic crisis has been worsened by the suspension of international aid, mainly over policy differences with Mugabe, in power since independence from Britain in 1980.