THE European Unionâ€™s economic recovery package to Zimbabwe could reach Euros 50 million (US$72,2 million) should the on-going talks bring out an “acceptable outcome” by the three political parties negotiating, the organisation said this week.
Responding to questions from businessdigest on Tuesday, an EU official said its immediate response once an outcome that is accepted by the three parties was reached “could amount to more than EUR 50 million in funds already committed but not implemented for food security, agriculture, public health, governance and support to civil society”.
The EU also said further assistance could also be made available in the “short and medium-term”.
“The EUâ€™s willingness to provide support would depend on a satisfactory outcome
to the power-sharing talks,” said the official.
An official with the EU said although it was still too early to establish the precise conditions at this stage, support would inevitably be linked to concrete progress being made on the ground.
“The EU expects an outcome that is acceptable to all parties participating in the power-sharing talks,” the official said.
“It (EU) has no preconceived ideas on what an agreement should contain; that is for the parties to decide.”
Once it appears certain that the political situation is conducive, the EU would be willing to contribute, as part of a broader international effort, to Zimbabweâ€™s stabilisation and recovery.
Support would be provided by both the European Commission and, on a
bilateral basis, by the EUâ€™s member states.
The talks have shown signs of stalling after Morgan Tsvangirai, the leader of the larger MDC faction, refused to sign the deal agreed to by President Robert Mugabe and Arthur Mutambara.
A declaration by the presidency on behalf of the EU passed on July 4 in Brussels states that the EU will only accept an outcome that reflects the will of the people of Zimbabwe.
“The European Union will only accept a formula which respects the will of the Zimbabwean people as expressed in the elections of March 29, which saw the Movement for Democratic Change and Morgan Tsvangirai win,” said the EU.
The EU said: “The result of this vote must serve as a basis for a political settlement. The EU encourages the Southern African Development Community (Sadc) and President Mbeki to step up their efforts to foster this process. The transition period must be as short as possible.”
Economic analysts have since said the country requires a lot of funding to revive the economy which has been declining since 2000.
“To state an exact amount that we (country) need at the moment will be very difficult because the country is virtually broke,” said an analyst with a commercial bank.
“In one of his monetary policies Reserve Bank Governor (Gideon Gono) said the country needs close to US$250 million a month to meet all its needs.
“That may not be enough now because the economy has continued to decline. We need to look at specific projects rather than the economy as a whole,” said an analyst.
The stiffest challenge is an economy that has shrunk by more than 60% in 10 years and a government that is virtually broke with foreign debts of US$4 billion as of March 31 and a domestic debt of US$7,9 million at July 15.
Inflation is currently at 11,2 million for June, but some economist estimate the figure to be over 20 million percent.
John Robertson, an economic commentator said the first challenge will be to halt the slide in the economy.
He said money alone will not be enough to resuscitate Zimbabweâ€™s economy.
“For the international community to give us international support we have to prove that we are worthy of that support,” Robertson said.
“We have to demonstrate that we can use the money responsibly. We have to behave in a better way than we have in the past 28 years. Even with that money we might not be able to achieve much if they do not change the whole system. We need stability and to address the issue of scarcities like foreign currency and food,” said Robertson.
By Jeslyn Dendere