By Wendell Roelf
CAPE TOWN (Reuters) - Repairing Zimbabwe's economy could cost as much as $5 billion (3.5 billion pounds) and foreign direct investment would help, said Prime Minister Morgan Tsvangirai on Friday.
The Reserve Bank of Zimbabwe said international and regional financiers had offered Zimbabwe $500 million in credit lines, but were cautious because of conflicting signals on policy.
Zimbabwe's government, formed between Tsvangirai's MDC party and President Robert Mugabe's ZANU-PF, must resolve an economic meltdown that has led to hyperinflation and a virtually worthless local currency. Prices double every day.
After meeting South African President Kgalema Motlanthe and Finance Minister Trevor Manuel to discuss a recovery strategy, Tsvangirai said Zimbabwe planned to use a number of currencies but was not considering adopting the rand as legal tender.
"As for the long-term economic recovery it has not been assessed ... but I think it would run into billions of dollars, maybe as high as $5 billon," Tsvangirai said at a news conference in Cape Town.
Tsvangirai, accompanied by Zimbabwean Finance Minister Tendai Biti, said Harare had to look at ways to encourage foreign direct investment.
"Obviously as a country that is emerging from such a dire situation, foreign direct investment is one of the areas of focus ... anything that is inhibitive for foreign direct investment ... has to be reviewed," Tsvangirai said.
MULTI-CURRENCY APPROACH
The Reserve Bank is looking at currency options. It has repeatedly revalued its dollar and lopped another 12 zeros off the battered currency this month.
"Our currency is devalued almost to a point of non-use, so we are going to use a multi-currency approach ... But at the moment there is no talk about the randification (of the economy). It is a multi-currency facility we are looking at," said Tsvangirai.
Motlanthe said earlier this month Zimbabwe, which is grappling with inflation of 200 million percent, could adopt the rand, but he did not give details. The rand is widely used on Zimbabwe's black market, alongside the U.S. dollar.
On Friday, Zimbabwe's central bank governor, Gideon Gono, said financiers had offered credit lines, but wanted clarification over reports suggesting the bank's recent monetary policy statement and the national budget presented by then acting Finance Minister Patrick Chinamasa would be reviewed.
Media reports quoted Deputy Prime Minister Arthur Mutambara as telling business leaders to disregard both policy documents, and the new finance minister, whose MDC party has been critical of Gono, told Reuters this week he would present a new budget.
"As we work to stabilise the national economy, we advise our principals in the field of politics to carefully weigh their pronouncements, particularly in technical areas such as banking and finance, that risk destabilising the economy," Gono told reporters in Harare.
Zimbabwe's economic crisis has been worsened by the suspension of international aid, mainly over policy differences with Mugabe, in power since independence from Britain in 1980.
(Additional reporting by Nelson Banya in Harare)