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IMF back in Zim next month

Shakeman Mugari

AN International Monetary Fund (IMF) team is scheduled to visit Zimbabwe next month for their annual Article IV Consultations amid deepening meltdown of

the economy.

Businessdigest understands that government and the IMF have since agreed on the date which sources said should be around mid-September.

The visit comes two months late after it failed to take place as planed in July and has been hanging in the balance amid market speculation that it could have been scuttled by the widening rift between Harare and the Bretton Woods institution.

Sources close to the issue said bickering between the fund and Zimbabwe had forced the IMF to postpone the visit twice in the past three months. There were reports that when the meeting was due in July Harare pleaded for more time to put its house in order.

“They requested for the meeting in July but the government said it needed more time to put its house in order,” a source said.

Government was yet to present its fiscal and monetary policies, the source said. He said when government later requested the IMF to visit in August it told the fund it was busy with its annual meeting.

“But now they have agreed on the date and the team will be arriving in the country mid next month.”

The visit comes eight months after the IMF stayed a decision to expel Zimbabwe, giving it a six months reprieve but demanded sound policies to stop the economy from further collapse.

The IMF also refused to reinstate Zimbabwe’s voting rights which were suspended in 1999 after the government stopped servicing its debt. Since then the IMF has refused to extend balance of payments support to Zimbabwe and other multi-lateral organisations have followed suit.

Sources however said government is still bitter about the IMF’s decision. Minister of Finance Herbert Murerwa wrote to the IMF in March complaining that Zimbabwe’s treatment at the February board meeting which led to the decision was inconsistent with the normal practice of the fund.

In the letter Murerwa also wanted to know why the IMF had refused to reinstate Zimbabwe’s voting rights despite having cleared its arrears under the General Resources Account.

Businessdigest understands that the IMF has not responded to the letter and analysts say they are unlikely to reverse the decision until government implements sound macroeconomic policies demanded by the IMF since Zimbabwe’s crisis started.

The IMF has urged Zimbabwe to reduce money supply growth, cut government expenditure, reduce the bloated public wage bill and remove price controls. Despite promises government has not done so.

Article IV is meant to monitor members’ compliance with the obligations to direct their policies toward fostering orderly economic growth with reasonable price stability.

It also seeks to ensure stability by promoting sound economic and financial conditions, and to follow exchange rate policies in keeping with these objectives.

Economic commentators said nothing fundamental had changed since the IMF’s last visit. They said their end report was likely to be as damning as the last one because Zimbabwe had not implemented any reforms to stop the economy from bleeding.

“It’s the same. We are still printing money, the wage bill is still high, the government is spending like never before and the budget deficit is widening — all of which is out of line with IMF’s advise to Zimbabwe,” said an economist with a local bank. “They (IMF team) will find the government doing the same thing that they have been strongly advised against.”

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