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Gono’s measures short of expectations

THE International Monetary Fund (IMF) executive board says the policy measures introduced by Reserve Bank of Zimbabwe governor Gideon Gono are not enough to turn around the economy.

The fund also warned that unless strong macroeconomic policies are undertaken urgently, the country’s social and economic conditions could deteriorate further.

In a statement released last week after the IMF executive board gave Zimbabwe a six-month reprieve, the fund said although Zimbabwe had made positive moves, there was need for comprehensive policies to address the crisis.

“The IMF executive board notes that Zimbabwe has taken positive steps in the area of the exchange rate and monetary policies since the last review, but concludes that these fell well short of what is needed to address Zimbabwe’s economic difficulties.

“The executive board warns that there is a significant risk that unless strong macroeconomic policies are undertaken without delay, economic and social conditions could deteriorate further,” reads the IMF board report numbered 5/205.

There is speculation that Harare has over the past month been trying to show that it is addressing the IMF’s recommendations to devalue the dollar by allowing it to slide on the auction market.

Previous IMF missions to Zimbabwe have recommended devaluation to boost exports to generate more foreign currency.

The dollar this week depreciated to $26 000 against the US dollar, up from $10 000 in the past two months but fetches nearly double on the black market.

Finance minister Herbert Murerwa this week however flatly denied allegations that the exchange rate movement was part of the IMF’s conditions.

“That is not true at all, it is not part of the deal,” Murerwa said.

The executive board also urged Zimbabwe to implement a comprehensive adjustment programme as a matter of urgency in the areas of fiscal, monetary, and exchange rate policies and structural reforms.

Zimbabwe recently made US$131 million loan repayments to the IMF to delay its expulsion.

* Meanwhile, the IMF has denied reports that Zimbabwe was last week forced to make a further US$50 million payment to avoid expulsion.

An IMF official told businessdigest on Wednesday that Zimbabwe “had not paid the US$50 million as previously recorded”.

He said their accounts showed that Zimbabwe had paid only US$120 million. “As far as we know, we only received US$120 million from Zimbabwe and that is final,” the official said.

Zimbabwe has been in continuous arrears to the IMF since 2001.

As of last week, Zimbabwe’s arrears to the IMF amounted to SDR119 million (about US$175 million), or about 34% of its quota in the IMF, down from US$295 million.

Of the current debt, SDR37 million (about US$54 million) is owed to the General Resources Account and SDR82 million (about US$121 million) to the Poverty Reduction Growth Facility Trust.

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. – Staff Writer.

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