HomeBusiness DigestIMF to decide Zim's fate on June 6

IMF to decide Zim’s fate on June 6

Ngoni Chanakira

FINANCIALLY beleaguered Zimbabwe is “secretly” trying to mend its luke-warm relationship with the Washington-based International Monetary Fund (IMF) exactly two weeks before the country’s vot

ing rights come up for discussion in the United States on June 6.

Zimbabwe currently owes the IMF SDR 206, 127, 543 or US$290 million.

In an interview this week, IMF senior resident representative Gerry Johnson confirmed that the IMF executive board was closely monitoring the progress made by Zimbabwe on policies and payments and would consider the country’s voting and related rights in the Fund on June 6.

Johnson said: “The situation remains the same as when the last IMF mission came to Zimbabwe in March in connection with the annual Article IV consultation between the IMF and Zimbabwe. Other issues will be discussed during the meeting on June 6. As you know the Minister of Finance and Economic Development Dr Herbert Murerwa held talks with our president and maybe more issues were discussed at that time but I am not in the picture as to what exactly was discussed.”

Minister Murerwa has been tight-lipped on his “unscheduled” meeting with IMF president Horst Kohler in Washington on the sidelines of the annual spring general meeting on April 14.

Murerwa was accompanied by Reserve Bank of Zimbabwe (RBZ) governor Dr Leonard Tsumba.

Tsumba’s second term in office officially runs out at the end of next month and insiders say his diplomacy with the IMF was crucial for Zimbabwe at this stage – especially after former Industry and International Trade minister Nkosana Moyo resigned from government two years ago.

Moyo is now working for the International Finance Corporation, a subsidiary of the World Bank, another institution that bails Zimbabwe out when it is in financial dire straits.

Zimbabwe’s balance of payments position remains under severe stress, propelled largely by the continued decline in export receipts and the absence of offshore lines of credit and multilateral and bilateral support.

This has resulted in major payment arrears by key parastatals such as the Zimbabwe Electricity Supply Authority and the National Oil Company of Zimbabwe.

Analysts say for political expediency, President Robert Mugabe and his cabinet colleagues have openly told the nation that they had severed links with the IMF and World Bank preferring instead to hold closed door sessions with the influential financiers.

The IMF two years ago suspended balance of payments support for Zimbabwe’s economic recovery programme because of poor repayments.

The move resulted in the interna-tional business community following suit and shunning Zimbabwe, citing its unstable economic and political situations.

An IMF staff team visited Harare from February 25 to March 13 to hold discussions with the Zimbabwean authorities on the economic situation and macroeconomic policies.

The staff team also met with representatives of civil society such as non governmental organisations, the business and financial communities, political parties, trade unions, as well as the diplomatic community.

Johnson said the IMF stance on Zimbabwe had “not changed since that meeting” and would only be made known after the “June 6 meeting in Washington”.

The IMF said then: “While Zimbabwe’s arrears currently preclude access to IMF lending, further determined policy adjustment efforts would be an important signal of Zimbabwe’s determination to address its serious economic difficulties. Such efforts would also begin to lay the basis for regularising Zimbabwe’s arrears to the IMF and other creditors.”

Johnson said: “Zimbabwe paid US$50 million in April towards the arrears.”

As at April 30 Zimbabwe’s IMF arrears stood at SDR158,75 million. Of this the principal amount came up to SDR148,59 million while charges/interest was SDR10,15 million.

The country has since promised to make small quarterly payments of US$1,5 million to the IMF.

The business community meanwhile says continued efforts should be made to improve relations with the international community and enhance international partnerships

Recent Posts

Stories you will enjoy

Recommended reading