HARARE – The government of Botswana has described as “unfounded” state media reports in Zimbabwe that it will be extending a $600 million-dollar loan to Harare.

The state-run Herald newspaper reported that Botswana had offered to lend Zimbabwe $600 million to support its diamond industry and local private firms, amid a severe dollar crunch.

The loan would consist of $500 million dollars for Zimbabwe’s diamond industry and a further $100 million to help private companies, whose operations have been hamstrung by the dollar shortage, the Herald reported, citing James Manzou, Zimbabwe’s secretary for foreign affairs.

But in a statement Wednesday, the government of Botswana dismissed the report, a common misreporting of bilateral agreements by Zimbabwe’s state-run media desperate for good news.

“Botswana and Zimbabwe are currently holding discussions under the framework of the Bi-National Commission which covers a wide range of issues which are mutually beneficial to the peoples of the two countries,” Botswana’s Cabinet secretary Carter Morupisi said.

“As such, media reports that are currently circulating about the line of credit worth six hundred million United States dollars that the government of Botswana has committed itself to extend to Zimbabwe are unfounded.”

Morupisi said a communique will be issued at the end of the state visit by Botswana President Mokgweetsi Masisi on Thursday.

Last month, South Africa said it had turned down Zimbabwe’s request for a $1.2 billion loan.

There are few signs the flow of foreign currency is improving in Zimbabwe after it ditched a discredited 1:1 dollar peg for its dollar-surrogate bond notes and electronic dollars, merging them into a lower-value transitional currency called the RTGS dollar.

Zimbabwe’s diamond sector has struggled since the government kicked out private companies from the eastern Marange fields in early 2016 after they declined to merge under the state-owned mining company.

Relations between Zimbabwe and Botswana have improved recently following a strained period when Botswana’s ex-President Ian Khama, who stepped down in 2018, routinely criticised former President Robert Mugabe for holding on to power for too long. A military coup in 2017 forced Mugabe to resign, ending his 37-year rule.