Tuesday, June 16, 2009

Germany to give Harare $35m

By KITSEPILE NYATHI and Reuters [Daily Nation] , Posted Monday, June 15 2009

Germany pledged 25 million euros ($35 million) in aid to Zimbabwe on Monday and Chancellor Angela Merkel said Berlin could provide more support if the poverty-stricken country undertakes more democratic reforms.

Zimbabwe’s Prime Minister Morgan Tsvangirai has been touring Europe and the US to try to convince donor countries that his fragile unity government can rescue the southern African country from economic and political chaos.

Germany’s Development minister Heidemarie Wieczorek-Zeul said Berlin would contribute 20 million euros to a World Bank fund focused on promoting democracy in Zimbabwe, and another 5 million euros for manure and seed.

Democratic reforms

Germany now mainly provides humanitarian aid to Zimbabwe.

Chancellor Merkel said she was ready to provide more comprehensive help if the unity government set about creating a constitution, undertaking land reform and establishing new state authorities.

Germany could help with these democratic reforms, she added.

“My expectation is that every success in the building of democratic structures could potentially lead to more help. But this need not be financial help. It could also be advice,” Chancellor Merkel told reporters after meeting Mr Tsvangirai in Berlin.

Western aid is only beginning to trickle into Zimbabwe -- and all of it is bypassing the unity government of Mr Tsvangirai and President Robert Mugabe.

US President Barack Obama on Friday promised $73 million in new aid that a White House official said would go towards fighting HIV and Aids and promoting good governance in the southern African nation.

Significantly, the money will not go to the government but will be channelled through aid agencies.

Chancellor Merkel said she could envisage Germany providing similar aid, targeted at equipping schools and hospitals.

Mr Tsvangirai said Zimbabwe needs credit to revive its economy.

“We have already made a number of strides forward. I ask that that be noted,” he said, pointing to the re-opening of schools and hospitals and some success in reining in inflation.

“We need bridge loans now to rebuild our economy,” he added.

Political aims

Zimbabwe’s unity government was formed by President Mugabe and Mr Tsvangirai in February but their power-sharing deal has not been fully implemented.

Mr Tsvangirai’s Movement for Democratic Change (MDC) has long accused President Mugabe’s Zanu-PF of using violence to further its political aims, charges it denies. Arrests of MDC activists have strained the new government.

Western donors have said aid will only flow when a democracy is created and economic reforms are implemented.

Meanwhile, a six-member IMF team is in Zimbabwe to assess progress in the reform of economic policies by the coalition government and the country’s humanitarian crisis.

The mission, which becomes the third since the formation of a coalition government in February, follows the IMFs decision last month to resume technical assistance to Zimbabwe, which was stopped a decade ago.

The head of the delegation jetted into the country today while the rest of the team began its meetings with Ministry of Finance officials last week on external domestic debts, revenue and expenditure.

During their stay, a series of high profile meetings with government, banking, industry and agricultural officials have been lined up.

The delegation is composed of Mr Vitaliy Kramarenko (head of mission), Mr Wouter Bossu, Mr Lars Engstrom, Mr Gilda Fernandez, Mr Richard Hughes and Mr Denevieve Verdier.

Will be scrutinised

On completion of their work on June 29, the mission is expected to hold a report back meeting with Finance minister Mr Tendai Biti, the Economic Planning and Investment Promotion minister, Mr Elton Mangoma, and the Central Bank governor, Dr Gideon Gono.

According to the missions work schedule, all sectors of the economy, including health, education, infrastructure and current food situation will be scrutinised.

Dr Gonos continued stay at the RBZ, which has divided the coalition because of his loyalty to President Mugabe, will also come under spotlight.

The IMF has in the past pointed out key governance weaknesses, including lack of enforcement of the Reserve Bank of Zimbabwe Acts accountability requirements and non-compliance with the International Financial Reporting Standards.