"South Africa and Zimbabwe are in discussion on whether the country will give Zimbabwe any financial assistance," spokesperson Phumza Macanda said.
"We really don't have much to go on because the discussions are at a sensitive stage. The terms and conditions of whatever financial assistance are being discussed and we don't have any details of the loan."
On Monday, Zimbabwe's finance minister Tendai Biti said his treasury did not have the capacity to fund the elections and that his country needed about R1.2-billion for the elections.
Biti said the Zimbabwean government wrote to the United Nations, South Africa and Angola to ask for loans.
He was reported later on Monday as saying South Africa would contribute R900-million. The elections are scheduled to be held in June.
Financial disarray
While the economy is growing – at 5% last year – public finances remain in disarray. In March the government collected a total of $241-million in revenue against a target of $301-million.
Exports since January stood at at $689-million while imports for the same period totalled $1.7-billion. "We are already under pressure. We are being suffocated even before we include the elections of 2013," Biti said.
He said the government received no revenue from diamond mines in January and February and only $5-million in March against a target of $15-million.
"If there was honesty from diamond revenue we would not be asking for money from anyone for the elections," the minister said. Long-time rival Prime Minister Morgan Tsvangirai's camp has accused Mugabe's Zanu-PF of pocketing diamond revenues.
"We essentially raped the economy for the referendum," Biti said adding that the funds borrowed for the elections could have been lent to companies to increase production.
Some companies that had closed at the height of the economic woes reopened following the formation of the power-sharing government, but production has remained low.
Zimbabwe is expected to hold elections at the expiry of a power-sharing government formed four years ago by Mugabe and Tsvangirai.
There is no agreement yet on the date of the elections. Mugabe wants them before June 29, while Tsvangirai wants the elections later in the year to allow for reforms to ensure a fair vote. – AFP, Sapa