Sick Zimbabwe needs $5b to recover

21.02.2009 LISTEN

An amount of $5 billion is needed to repair Zimbabwe's broken economy, PM Morgan Tsvangirai said. He said the country is looking to attract direct foreign investment to help in its recovery. He also said he planned to use a number of currencies but was not considering adopting the rand as legal tender.

zimbabwe-bill-of-ten-million-dollar
Tsvangirai was meeting South African President Kgalema Motlanthe and Finance Minister Trevor Manuel to discuss a recovery strategy for Zimbabwe.

"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," Tsvangirai said at a news briefing, according to Reuters.

Zimbabwe's new government, formed between Tsvangirai's MDC party and President Robert Mugabe's ZANU-PF, is faced with resolving an economic meltdown manifesting itself in hyperinflation which has seen prices double every day.

Tsvangirai, accompanied by Zimbabwe's Finance Minister Tendai Biti, said Harare had to look at ways to encourage foreign direct investment.

"Obviously as a country that is emerging from such a dire situation, foreign direct investment is one of the areas of focus ... anything that is inhibitive for foreign direct investment ... has to be reviewed," Tsvangirai said.

He said the country planned to use several currencies but ruled out adopting the South African rand for use in Zimbabwe where the Reserve Bank has repeatedly revalued its dollar and lopped another 12 zeros off the battered currency this month.

"Our currency is devalued almost to a point of non-use, so we are going to use a multi-currency approach ... But at the moment there is no talk about the randification (of the currency). It is a multi-currency facility we are looking at," said Tsvangirai.

Motlanthe said earlier this month Zimbabwe, which is grappling with inflation of 200 million percent, could adopt the rand, but he did not give details.

The rand is already widely used on Zimbabwe's black market, alongside the U.S. dollar.