HARARE (AFP) -- Zimbabwe has signed a loan agreement with a French bank to purchase much-needed supplies of fuel in a deal that involves offering part of its earnings from nickel mining as a guarantee.

BNP Paribas will lend 50 million dollars (39 million euros) to allow Zimbabwe's national oil company to import fuel for the private and public sectors, the state Herald newspaper reported on Wednesday.

Under the deal signed in Harare on Tuesday, Zimbabwe's Bindura Nickel Corporation (BNC) has put up a percentage of its export earnings as a guarantee for the loan, said company spokesman James July, who declined to give specifics.

"We made this undertaking to broker the fuel deal after having seen the difficulties the economy is operating under," July told AFP.

Zimbabwe has been struggling with fuel shortages for nearly seven years due to a foreign currency crunch.

The fuel crisis has worsened over the past months, with long meandering queues at fuel stations where drivers wait for days for fuel deliveries, while urban commuters endure long hours queuing for the few available buses.

"This facility will go a long way in addressing the country's fuel needs," central bank governor Gideon Gono was quoted as saying by The Herald.

He said the first fresh supplies of fuel from the loan would come in June and that the one-year arrangement could be renewed.

"But for it to be renewable, it depends on our ability to service the facility," he said.

Jean Talbot, head of BNP Paribas' Commodity Structured Finance for Africa and Middle East, said his organization was ready to work with Zimbabwe.

"We are hopeful that it is the beginning of a long a story," Talbot was quoted as saying by The Herald.

Despite the fuel deal, Zimbabwe is "not yet out of the woods," said Gono.

Zimbabwe spends 40 million US dollars per month to meet its fuel requirements.

The southern African country is in the seventh year of economic recession characterized by galloping inflation which peaked to 1,042.9 percent last month and chronic shortages of goods like cooking oil and fuel.

Confederation of Zimbabwe Industries chief economist Benard Mufute said the loan would not bring the fuel crisis to an end.

"However, we need to thank Bindura Nickel Corporation for putting their head on the block for such a sacrifice," Mufute said.

"With this kind of an agreement everyone has to keep part of their bargain," said independent economist John Robertson, adding that the deal could be a starting point to solving the perennial fuel crisis.

"The financiers who in this case are the French bankers wanted a tangible guarantee which they got in the form of nickel.

"Hopefully, nothing will go wrong with this agreement like we saw with previous projects with the Libyans and Chinese. Agreements were signed but not adhered to," said Robertson.

The fuel shortages have spawned a burgeoning black market where private importers sell the commodity for as much as 10 times the government-fixed price.

The government blames its economic woes on sanctions imposed by the United States and EU countries on President Robert Mugabe and his inner circle following presidential elections in 2002 which the opposition said were rigged.