Zimbabwe rescue package

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Zimbabwe rescue package

As the situation in Zimbabwe has changed, there has been talk about a financial rescue package to help get the Zimbabwean economy up and running again.

There are both good and bad things to this.

The Zimbabwean economy used to be the granary of Southern Africa, now we have to send them food aid.

The hospitality industry has benefited massively here in South Africa from highly educated Zimbabweans who have escaped the economic meltdown in their country. If their economy gets up and running again then we can expect the service levels in restaurants here to decline seriously.

But a productive Zimbabwe on our borders is more than worth losing a few highly skilled waiters.

Bua News reported on the government's stance towards this rescue package. Currently Trevor Manuel and Tendayi Biti his Zimbabwean counterpart are in talks to decide what can be done.

The article reported that it was expected to cost around US$ 5 billion in the short term to get them back up on their feet again.

Up to US$ 1 Billion is hoped for from South Africa.

That is one huge wack of wonga.

In another Bua News article The President, Kgalema Motlanthe, stated to parliament that this rescue package would not affect our budget here in South Africa.

The president was hesitant to give an exact figure of how much a Zimbabwean bail out might cost until the finance ministers had finished with their meetings. He further stated that both a short and long term plan were necessary in order to ensure that the Zimbabwean economy gets back on track.

The President was also interviewed by the SABC this weekend according to a Business Report article. The article carried the surprising statement by the President that it 'might be practical for Zimbabwe to negotiate with the SA Reserve Bank for the rand to become a common currency'.

This is unlikely to have been a spontaneous off-the-cuff remark.

Apparently the SABC has to send all of its questions to the Presidents office before the interview for pre-approval. This suggests that that was more than just an unconsidered remark.

There has been a political decision to help Zimbabwe out and this could be one of the ways in which it is done.

The Reserve Bank withheld comment until they were formally approached about the question, but they would have fully briefed the President before he said anything.

The Zimbabwean crisis may or may not be over, but if I were a Zimbabwean I would be very wary of pegging my country, regardless of the problems, to the currency of another.

This helped crash Argentina out when they pegged to the US dollar. As a trusted neighbour, who knows maybe we will do the right thing, but already South African companies are salivating at the thought of launching full scale back into Zim.

Justmoney says get a savings account, just in case you need cash to buy Zim dollars and make a little money when and if they revalue to the Rand.