The Zimbabwean government has secured a 60-million-U.S. dollar loan from a Tunisia-based African Export-Import Bank to boost tobacco production, local media said on Thursday.

Finance Minister Tendai Biti was quoted by The Herald as saying that his office was working on the modalities of releasing the funds, which would be disbursed through a consortium of local banks.

He was speaking during the 49th congress of the Zimbabwe Tobacco Association on Tuesday. Biti, however, said he was aware that the loan secured was short of the industry's requirements.

"I have been told by the ZTA president Andrew Pereira that the industry requires 120 million U.S. dollars to increase production from the current 42 million kg to around 75 million kg," he said.

The securing of finance for the industry is part of the mandate that the government apportioned itself under the Short Term Emergency Recovery Program as it tries to wean off farmers who have in the past depended on input handouts.

The tobacco industry received a major boost during this year's marketing season, which began during the second week of May, following the adoption of the multiple currency system that has resulted in tobacco farmers receiving proceeds for their crop in dollar.

Farmers are currently receiving a maximum cash pay out of 1,500dollars with the remainder of their proceeds being paid into their accounts. This has boosted deliveries for the season as well as brightened prospects for an improved 2009/2010 tobacco farming season.

According to the latest statistics 31.1 million kg of tobacco has so far been sold through both contract and individual sales since the season opened generating 90.4 million dollars.

The seasonal average prices have also been firming from just over 2.50 dollars per kg to around 2.90 dollars per kg.

Contract sales have accounted for most of the tobacco sold so far with 19.4 million kg worth 56.9 million dollars having gone under the hammer through the system while the remainder 11.6 million kg valued at 33.4 million dollars have been sold through individual sales.

Source: Xinhua