Repayment no guarantee against expulsion

THE government of Zimbabwe has admitted that the repayment of US$120m ($2.8 trillion) to the IMF may not avert its threatened expulsion.

Zimbabwe owed nearly $300m before the payment, raising the possibility of the country’s expulsion from the IMF.

An IMF delega

tion is currently in the country and has been holding talks with the government, ahead of an IMF decision on 9 September on whether or not to expel Zimbabwe from the international financial institution.

Zimbabweans are facing a deep economic crisis, with high unemployment, rampant inflation and food and fuel shortages.

Reserve Bank Governor Gideon Gono told The Herald newspaper the funds came from exporters and holders of free funds.

But South Africa’s Business Day newspaper reports that the money came from “undeclared foreign exchange reserves which could be seen by the IMF as a serious violation of its rules on transparent presentation of key data”.

Asked whether the payment would affect the prospect of expulsion from the IMF, Gono said: “We are a guilty party from a technical point of view.

“All we can do is to plead mitigatory circumstances to our arrears situation and pray that the jury will see for itself how genuine our efforts at self-correction are.”

In recent weeks there has been speculation that South Africa would pay part of Zimbabwe’s debt directly to the IMF.

Dr Gono was quoted as saying negotiations with South Africa were still in progress, and that the latest payment to the IMF would not undermine ongoing deliberations.

On Wednesday, South African Foreign Minister Nkosazana Dlamini-Zuma said South Africa would continue its engagement with Zimbabwe to prevent a complete collapse.

“We may not have the results that you expect, but it doesn’t mean that we are not doing anything,” she said in response to questions in parliament.

“I don’t think we should think or deceive ourselves and think we have some magic that we can wave and get Zimbabwe to change if they don’t want to change,” the foreign minister said.

On reports that President Robert Mugabe had rejected South African financial help because of conditions attached to it, Dr Dlamini-Zuma said South Africa could not “force Zimbabwe to take a loan”.

Zimbabwe’s economy has shrunk by 30% in the past four years and inflation, already hovering at 164.3% in June, shot up to 254.8% in July, dealing a blow to the government’s goal of bringing inflation down to 80% by year end.

The Zimbabwean dollar also continues to slide and today fetched 24 504 against the greenback at the official rate but could be changed in the black market at around 45 000.