Libya to ease Zimbabwe fuel crisis

The Libyan and Zimbabwean leaders are old friends

Zimbabwe's Government is reported to have secured a deal with Libya which could ease crippling fuel shortages.

The independent Financial Gazette newspaper quoted unnamed senior government sources as saying the deal was brokered between President Robert Mugabe and Libyan leader Muammar Gaddafi, who visited the country last week.

Under the arrangement, Libya is to supply fuel worth $360m a year in exchange for exports of Zimbabwean products.

Zimbabwe's economy is in deep recession, which has caused a shortage of hard currency to buy imports like fuel and medicine.

Zimbabwe needs about $40m of fuel imports each month, but supplies have been erratic for more than 18 months, since the National Oil Company of Zimbabwe had its credit lines cut over mounting debts.

Fuel problems

The reported agreement will mean that each quarter, $90m will be released for fuel supplies to Zimbabwe.

Fuel shortages affect all Zimbabweans

"The deal will guarantee fuel supplies to Zimbabwe for at least a year, and is renewable, which means this could be the end of the country's fuel problems," an official was quoted as saying.

Last year Libya gave Zimbabwe a $100m financial package.

Earlier this month Zimbabwean trade unions held a two-day national strike, protesting at 70% fuel price rises.

The government is due to hold talks with unions soon, seeking to avert an indefinite strike.

Zimbabwe's economy is in recession and the country's problems have deteriorated due to the halting of donor aid over President Mugabe's land reform plans.