Harare  - The International Monetary Fund said Friday it had allocated a 510 million dollar loan to Zimbabwe, but finance minister Tendai Biti said the government cannot afford to take the loan.

The allocation follows an agreement by the G20 group of the world's leading economies in April to increase to US$750 billion the IMFs support to economies stricken by the world recession.

But Biti told German Press Agency dpa: "It's not a grant, its a loan. It attracts interest.

"We would be contracting debt when our balance of payments and our debt burden is very fragile. We have less than US$2 million in import reserves. Our arrears account for 150 percent of gross domestic product.

"There is no way we can take that (loan) up in the context of the arrears and the deficit. It would be very imprudent."

A spokesman for the IMF said that 400 million dollars of the allocation had already been paid into Zimbabwe's account, and there was "no conditionality" attached to it.

However, the second portion of the loan of US$ 110 million would be "escrowed until Zimbabwe meets its arrears" of 139 million dollars.

The loan would have been the IMF's first payment to Zimbabwe since 1999, soon after which President Robert Mugabe launched a campaign of violent repression, mass seizures of white-owned commercial farm land and economic policies that plunged the economy into chaos and saw the country fall steadily back on its payments to international creditors.

A power-sharing agreement between Mugabe and Morgan Tsvangirai, his pro-democracy opponent but now prime minister, was inaugurated in February and Biti abolished the worthless national currency and introduced the US dollar as legal currency.

The action promptly stabilised the country's inflation rate of 80 billion percent a month, and filled supermarket shelves that had been empty for nearly a year.  dpa