Zimbabwe’s president and opposition leader will sign an agreement setting the terms for talks to form a unity government, South Africa’s foreign affairs spokesman said Monday.

The spokesman, Ronnie Mamoepa, said the agreement is “a positive step forward in the ongoing dialogue,” to resolve the crisis in Zimbabwe since elections in March, which escalated after June’s widely condemned presidential runoff.

Opposition leader Morgan Tsvangirai won more votes than President Robert Mugabe in March but pulled out of the runoff because of escalating state-sponsored violence against opposition supporters.

Monday’s breakthrough came after South African President Thabo Mbeki agreed Friday to work closely with the U.N. and the African Union in his role as mediator. The signing will take place in Harare Monday afternoon in the presence of Mbeki.

It will be a diplomatic coup for Mbeki, who has insisted that dialogue and not punitive sanctions are the only way to deal with Mugabe.

Earlier this month, Russia and China delivered a rare twin veto of a U.S.-sponsored U.N. Security Council resolution to impose sanctions on Mugabe and his top aides. The aim was to punish them for allegedly overseeing political violence and force them to negotiate.

However, the European Union is expected Tuesday to widen sanctions targeted at Mugabe and his cronies, including tightening a travel ban.

Mbeki, appointed by the main regional bloc to mediate between Mugabe and Tsvangirai, has been negotiating with the two sides sine July 10 and says the talks would produce some form of coalition.

Many observers and analysts see a coalition — perhaps with Mugabe as president and Tsvangirai as prime minister or vice president — as the only way to lead the nation out of its impasse and begin reversing its economic collapse.

Zimbabwe’s central bank on Monday issued a new 100 billion-dollar note in a vain attempt to keep up with shortages of cash and the world’s worst inflation running at 2.2 million percent.

Mugabe and his party remain adamant that he is Zimbabwe’s duly elected leader, even if most of the rest of the world says his one-man June 27 presidential runoff was a sham.

Mugabe’s party has said it is open to power-sharing but only if Mugabe heads any unity government. The opposition says publicly that it is open to a “government of national healing” — but only with moderate ruling party members, not Mugabe.

An end to political violence is expected to be one of the conditions outlined in the agreement.

Tsvangirai’s party says more than 120 of its activists have been killed by Mugabe’s police, soldiers and party militants since the first round of voting in March. The opposition won most parliament seats in that election for the first time since Mugabe took power at independence in 1980.