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Last Updated: Friday, 22 December 2006, 07:53 GMT
Zimbabwe in talks on China loan
Robert Mugabe
Critics say President Robert Mugabe has ruined Zimbabwe's economy
Zimbabwe is preparing to open talks with China for a $2bn (1.1bn) loan, in a bid to boost its crumbling economy.

Much of the money would be used to fight Zimbabwe's soaring inflation, the state-run Herald newspaper reported.

China has been looking to extend its influence in Africa and recently hosted a summit of African leaders.

Zimbabwe has been struggling to cope with economic collapse brought about, critics say, by the policies of President Robert Mugabe.

The southern African country - previously one of the continent's most developed economies - has seen inflation leap above 1,000%, while food and fuel shortages are rife.

The International Monetary Fund warned earlier this week that Zimbabwe's dire economic situation could get worse.

Economic myth

If agreed, the Chinese loan would be the biggest foreign loan secured by President Mugabe's government.

"China's government is ready to negotiate with the government for a $2bn loan facility to fight inflation and other aspects of the economy," Zimbabwe's ambassador to China, Chris Mutsvangwa, said.

He said China's assistance to Zimbabwe would "dispel the myth" that the country's economic problems were beyond redemption.

China had appointed an official to open talks with Zimbabwe's finance minister and central bank governor, the Herald reported.




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