SADC fails to raise rescue funds for Zimbabwe

Mr Manuel said South Africa would support Zimbabwe’s efforts to raise $2bn (£1.4bn) needed immediately for economic reconstruction.

That would at least "help open channels" for Zimbabwe’s new coalition, he said, as it tries to repair relations with multilateral donors and other lenders. But South Africa has limited capacity to provide funding from its own resources, he added.

Mr Manuel was speaking to the reporters after a regional meeting where Zimbabwe tried to raise an initial $1bn to repair its education, health and some basic infrastructure over the next 10 months.

SADC, the 15-nation regional body, had orchestrated a power-sharing deal between Robert Mugabe, Zimbabwe’s president, and Morgan Tsvangirai, its prime minister.

The South African finance minister said: "A year ago SADC states were all in fiscal surplus but we are now facing really tough times."

Figures released this week showed that South Africa’s economy shrank nearly 2 per cent in the fourth quarter of last year and the country is running a current account deficit of about 8 cent of gross domestic product.

Zimbabwe is also seeking $1bn in credit lines to allow businesses to start working again in the wake of a decade in which the economy has been in freefall.

Mr Manuel said the amounts being sought were "not unusually large but a lot of work remains to be done".

He said arrears owed to multilateral lenders, such as the African Development Bank, and other creditors – estimated at about $3bn by economists in Harare – could prove an obstacle. Mr Manuel said unless ways were found to "clear the arrears, there was no way the plan could work".

Zimbabwe hopes to discuss its plans with the ADB and other lenders at a meeting in Tunis in the next few days. Mr Manuel praised the "singleness of purpose" displayed by Zimbabean ministers from Mr Mugabe’s Zanu-PF and the two wings of the Movement for Democratic Change at the SADC meetings, in spite of evidence of tensions within the two-week-old administration.