Zimbabwe makes IMF history


Ngoni Chanakira

INTERNATIONAL Monetary Fund(IMF) boss Horst Kohler has awarded Zimbabwe his association’s wooden spoon for arrears for the year 2003.



“Verdana, Arial, Helvetica, sans-serif”>The Bretton Woods institution, in a survey for the period ending September 8, said while the arrears of other countries, with the exception of Sudan, continued to rise, the most notable of these was Zimbabwe.


It said this was the first new case of significant arrears to the Fund’s General Resources Account since 1993 and the first case of “protracted” arrears to the Poverty Reduction and Growth Facility (PRGF) Trust.


The PRGF is the IMF and World Bank’s low interest lending facility for its “poorest members”.


Zimbabwe’s quota with the IMF currently stands at SDR353, 4 million from a world total of SDR212 794 million as of August 31. The country has however been in continuous arrears to the Washington-based organisation since February 2001.


As of the end of May this year, Zimbabwe’s arrears to the IMF amounted to SDR164,9 million (US$233 million), or about 47% of the country’s quota in the Fund.


On June 6 the IMF suspended Zimbabwe’s voting and related rights, after having determined that the country had not sufficiently strengthened its cooperation with it in areas of policy implementation and payments.


As a result of the decision, Zimbabwe can no longer appoint a governor or alternate governor to the IMF, participate in the election of an executive director for its board, or cast its vote in decisions on IMF policy or country matters.


Kohler said protracted arrears to the IMF decreased in financial year 2003 to SDR2,01 billion, from SDR2,36 billion a year earlier.


He said this reflected mainly the clearance of arrears by the Democratic Republic of the Congo in June 2002 and the Islamic State of Afghanistan in February this year.


“However, the arrears of other countries, with the exception of Sudan, continued to rise,” the IMF boss said.


“The most notable of these is Zimbabwe, which is the first new case of significant arrears to the IMF’s General Resources Account since 1993 and the first case of protracted arrears to the PRGF Trust. The two countries with the largest protracted arrears to the IMF – Sudan and Liberia – account for more than 78% of the total overdue financial obligations to the IMF – with Somalia and Zimbabwe accounting for most of the remainder.”


If a member does not actively cooperate with the IMF in seeking a solution to its arrears problems, a timetable of remedial measures of increasing intensity is applied.


Remedial measures begin with suspending a member’s access to the use of IMF resources in the PRGF or Heavily Indebted Poor Countries Initiative.


If the country fails to take appropriate measures, the executive board then issues a declaration of non-cooperation in the case of arrears to the PRGF Trust.


Ultimately, in the case of overdue financial obligations to the General Resources Account, the member’s withdrawal from the IMF is compulsory.


Most recently, further remedial measures were applied to Liberia and Zimbabwe, when their voting and related rights in the IMF were suspended in March and June this year, respectively.

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