"Initially they wanted money, $1.2bn .We don't have $1.2bn but what we have is the will to assist them. [What we can do] is to open trade lines. We said we can look at interventions where possible," said Mogajane.
"Our engagements are across the system - assisting from a budgeting implementation point of view, and reprioritising of public expenditure, including on their behalf engaging multilateral development [financing] institutions, which we have started."
It is understood that there are no existing credit lines between SA and Zimbabwe. SA lent Zimbabwe $200m-$300m when Robert Mugabe was still president. Zimbabwe is in arrears with the IMF, World Bank and African Development Bank (AfDB).
Zimbabwean President Emmerson Mnangagwa is visiting Russia, Belarus, Azerbaijan and Kazakhstan in the hope of attracting investment. He will attend the World Economic Forum in Davos, Switzerland, which starts on Tuesday.
SA is in discussions with the Paris Club on Zimbabwe's behalf. The club is a group of officials from major creditor countries who find co-ordinated solutions to payment difficulties experienced by debtor countries. It comprises the IMF, World Bank, OECD, UN Conference on Trade & Development, the European Commission, the AfDB and the Asian Development Bank.
No Christmas box for Zimbabwe: Neighbour asked SA for $1.2bn bailout
Desperate senior government officials from Zimbabwe met the South African government a day after Christmas and asked for help with a bailout.
The delegation, led by Zimbabwe's finance minister, Mthuli Ncube, is understood to have sought $1.2bn in aid.
Zimbabwe faces an economic crisis which has resulted in the price of petrol increasing by 150% from R19 a litre to R41, the highest in the world. Riots broke out this week against the increased costs.
Inflation in November was 31%, the latest figure available. Independent estimates have put the rate at more than 100% in real terms.
Teachers and doctors are picketing for salary increases.
The December meeting had been attended by South African Reserve Bank governor Lesetja Kganyago and deputy governor Daniel Mminele, Reserve Bank of Zimbabwe governor John Mangudya and permanent secretary in the Zimbabwe ministry of finance & economic development, George Guvamatanga.
National Treasury director-general Dondo Mogajane told Business Times that SA declined to lend the $1.2bn because of its own difficult financial position and concerns over how Zimbabwe would repay the money amid fuel shortages, a hefty public sector wage bill and other challenges.
"Initially they wanted money, $1.2bn .We don't have $1.2bn but what we have is the will to assist them. [What we can do] is to open trade lines. We said we can look at interventions where possible," said Mogajane.
"Our engagements are across the system - assisting from a budgeting implementation point of view, and reprioritising of public expenditure, including on their behalf engaging multilateral development [financing] institutions, which we have started."
It is understood that there are no existing credit lines between SA and Zimbabwe. SA lent Zimbabwe $200m-$300m when Robert Mugabe was still president. Zimbabwe is in arrears with the IMF, World Bank and African Development Bank (AfDB).
Zimbabwean President Emmerson Mnangagwa is visiting Russia, Belarus, Azerbaijan and Kazakhstan in the hope of attracting investment. He will attend the World Economic Forum in Davos, Switzerland, which starts on Tuesday.
SA is in discussions with the Paris Club on Zimbabwe's behalf. The club is a group of officials from major creditor countries who find co-ordinated solutions to payment difficulties experienced by debtor countries. It comprises the IMF, World Bank, OECD, UN Conference on Trade & Development, the European Commission, the AfDB and the Asian Development Bank.
SA has the African Renaissance & International Co-operation Fund (ARF). The ARF Act was promulgated on January 22 2001 to identify and fund projects for regional integration to promote democracy and good governance, prevent or resolve conflicts, and for socioeconomic development integration.
SA used this fund to help with the elections in the Democratic Republic of Congo and Madagascar. The fund is not big enough to help Zimbabwe.
Commentators say that at the heart of Zimbabwe's challenges are its currency woes.
Finance minister Tito Mboweni supported Zimbabwe's intention to introduce a new currency to counter its failed bond note, which has dropped dramatically in value.
Jee-A van der Linde, an economist at NKC African Economics, said: "The currency crisis . is crippling the very sectors that are required to help create an economic turnaround."
He said the crisis had created a large informal market, precipitated by widespread distrust in the financial system.
The government had to find solutions to unlock foreign direct investment into agriculture and mining, which were key to generating foreign currency, Van der Linde said.
Last year the risk consultancy Fitch Solutions, a division of the international credit ratings agency, warned that indecision on currency reforms by the Zimbabwean finance minister was aggravating the foreign-currency crisis. The crisis was caused by a trade deficit of $1.6bn in the seven months from February to August 2018.
Jane Morley, head of Sub-Saharan Africa country risk at Fitch Solutions, said: "The problem for authorities is that reserves need to be built up and the fiscal deficit contained before they can switch to a new currency regime. But these cannot be achieved unless and until there is substantial devaluation.
"Even a large cash injection [from whatever source] would not be sufficient to address structural problems and spark sustainably higher levels of economic growth."
Morley said for economic growth to be achieved, Zimbabwe's government needed to adopt a more investor-friendly approach and establish a track record of business-friendly reform.
Attempts to reach the Zimbabwean government were unsuccessful.
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