IMF board meeting postponed

Godfrey Marawanyika

ZIMBABWE will only know its fate regarding its International Monetary Fund membership on Tuesday after the IMF executive board postponed its scheduled meeting, originally set for today. <
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The executive board was supposed to review Zimbabwe’s case today but this was moved to next week. IMF officials on Wednesday said the meeting had been pushed to next week because of a board break.


The officials said Finance minister Herbert Murerwa and central bank governor Gideon Gono had been informed about the change of dates.


The review of Zimbabwe’s membership comes against a backdrop of failure by Harare to settle its overdue obligations to the fund since 1999.


According to latest figures, Zimbabwe owes the IMF Special Drawing Rights (SDR) 199,56 million, being the principal debt.


Of that debt, the principal arrears amount to SDR178,55 million, with interest being SDR 21,02 million.


At their peak between 2003 and last year, the country’s arrears were SDR301 million, but were reduced to SDR201 million by June 20 this year when an Article IV delegation was in the country.


In an IMF media transcript, Thomas Dawson, the director of the external relations department, said the IMF board’s timetable to decide Harare’s fate had been based on a six-month basis.


“The present timetable for the consideration of the Zimbabwe case has been sort of a six-month timetable, and the last board discussion was on February the 6th, I believe. I do not have the precise date here, but toward the middle of February,” Dawson said.


“It happens that that six-month period will come during our board recess, so I would not necessarily expect our board discussion will happen before the board recess. It will happen shortly thereafter.”


Dawson said the executive board’s “informal recess will start in the week of August 8. The last day of board meetings would be Friday, August the 5th.”


Although Gono could not be reached for comment this week, a fortnight ago he indicated that the country was willing to increase its payments.


Gono, who was part of President Robert Mugabe’s delegation to China, is expected back in the country today.


Since Wednesday, Murerwa could not be reached for comment as he was continuously said to be in a series of meetings.


Financial sector sources said the two working days reprieve could result in the line of credit promised by South Africa being used to settle the IMF debt.

They said South African President Thabo Mbeki had also indicated that he could use his influence to make sure that Zimbabwe would not be shown the exit door.


Last month Zimbabwean authorities were in South Africa to plead for a R6,5 billion (US$1 billion) line of credit to finance the country’s essential imports and to pay its foreign debts.


Expulsions from the IMF are rare, with Czechoslovakia being the only country kicked out of the institution’s ranks in 1954.


Decisions to expel member countries are made by the IMF’s powerful board, which includes ministers of finance and central bank governors.


Compulsory withdrawal is the last step in a series of escalating measures that the IMF applies to members that fail to meet their obligations under the Articles of Agreement.


In its June visit the IMF mission projected that, on the basis of present policies, the budget deficit will increase markedly in 2005, partly due to the cost of higher food imports, interest payments and higher pension costs.

The mission said together with the RBZ’s substantial producer and credit subsidies, these deficits would fuel a sharp increase in money supply, and hence inflation, by end-2005.


“The authorities indicated their desire to address these problems by taking measures to contain further increases in the budget deficit,” the IMF said.


“The macroeconomic outlook is further clouded by the gravity of the food security situation and implementation of ‘Operation Restore Order’, which threatens to worsen shortages, contribute to lower growth, and aggravate inflation pressures.”