SA and Zimbabwe discuss bail-out

President Mugabe's government faces expulsion from the IMF

South African and Zimbabwean representatives are engaged in talks over a South African loan to its neighbour, officials say.

Zimbabwe is seeking assistance to solve a foreign exchange crisis and repay a $300m debt to the IMF.

The Zimbabwean opposition says any money from South Africa should be used for humanitarian ends.

South African opposition parties say any help would amount to an endorsement of human rights abuses in Zimbabwe.

South African Finance Ministry spokesman Logan Wort told the BBC News Website that talks were under way and he hoped they would be concluded soon, though he would not confirm the timing or the agenda for the talks.

'Sensitive'

"These talks are very sensitive and until they finalise them we won't be talking about the content of the talks," Mr Wort said.

A direct show of solidarity by the South African government would engender tremendous hope amongst those who have lost everything as a result of the Zimbabwe government's disastrous policies Movement for Democratic Change

Government spokesman Joel Netshitenzhe confirmed that finance ministry and reserve bank officials from both countries were involved, but would not say at how high a level the talks were taking place.

According to South Africa's Business Day newspaper, the talks in Pretoria involved the finance ministers and reserve bank governors from the two countries.

On Wednesday, South Africa's cabinet announced it agreed in principle with offering assistance to Zimbabwe "within the context of their programme of economic recovery and political normalisation".

Solidarity

Zimbabwe's opposition Movement for Democratic Change "cautiously" welcomed the announcement, but said the priority must be to address the consequences of the recent housing demolition programme by President Robert Mugabe's government.

A UN report said 700,000 were affected by housing demolitions

"A direct show of solidarity by the South African government would engender tremendous hope amongst those who have lost everything as a result of the Zimbabwe government's disastrous policies," an MDC statement said.

A recent United Nations report said 700,000 Zimbabweans had been left homeless by an operation that the government said was aimed at getting rid of illegal buildings and businesses.

South Africa's opposition Democratic Alliance said the cabinet's announcement amounted to "an endorsement of the Mugabe government and its policies".

The Independent Democrats said South Africa's proposal was "too vague and may do no good to help the needy".

Failed harvest

Following a failed harvest, Zimbabwe is suffering food shortages.

It has been short of foreign currency for imports such as fuel for several years.

Mr Mugabe's critics say his seizure of white-owned land have wrecked the country's agriculture-based economy.

He blames his problems on a Western plot.

Last week, Mr Mugabe visited China seeking financial assistance but he did not obtain the help he had hoped for.

South African newspapers reported that Mr Mugabe was only granted $6m for grain imports by Beijing.