ZIMBABWE managed to pay US$120 million to the International Monetary Fund (IMF) by liquidating foreign currency accounts owned by corporates in a bid to avoid the cou
ntry’s expulsion from the fund.
Legally, corporate accounts for exporters are liquidated over a 30-day period. Central bank governor Gideon Gono said the funds came from exporters and free funds.
“The forex that was sent to the IMF could have been used more productively,” said a senior merchant banker. “I think the government made the decision in the knowledge that the South African loan is on its way.”
This is the first time Zimbabwe has made a substantial one-off payment to the IMF. Analysts yesterday said the debt repayment however would not open the floodgates for Harare to access funds from the IMF and the World Bank.
Zimbabwe’s economic problems will remain despite the payment. No balance of payments, new lines of credit or direct foreign investment will flow in as a result of the payment.
Speaking from Washington on Wednesday, IMF spokesperson David Hawley confirmed that Harare had paid part of its debt.
“On August 29, 2005 Zimbabwe made a payment of US$120 million to the International Monetary Fund to clear some of its arrears to the fund, which date back to 2001. Following the payment, arrears to the fund now stand at SDR119 million (about US$174 million),” Hawley said.
“As previously announced, the IMF executive board will meet on September 9 to consider the 2005 Article IV consultation with Zimbabwe as well as the possible issue of compulsory withdrawal, which was last taken up by the board in February 2005.”
An IMF staff mission is in Harare to review recent economic developments.
The mission is also preparing a report for the IMF executive board, but the delegation later extended its stay.
The three-member delegation, which comprises Sharmini Coorey, Sonia Munoz and Kevin Fletcher, was still in the country yesterday.
Analysts said the payment could have been done ages ago since government did not use funds from South Africa.
If expelled, Zimbabwe would be the second country to be thrown out of the IMF after the former Czechoslovakia in 1954.
Critics and the opposition accuse President Mugabe for the country’s devastating economic decline, characterised by triple-digit inflation and sky-high unemployment.
But Mugabe’s government has blamed drought and sanctions by the European Union and the United States for the country’s plight.
Analysts have said although Zimbabwe still owes the IMF, the reduction in arrears removes the risk of having foreign assets attached by creditors.
Economist Eric Bloch said because of the various actions taken in the monetary policy review statement to remove economic distortions, the IMF may be motivated to allow Zimbabwe’s continued membership.
“Many donor states give assistance to countries that are members of the IMF, so retaining membership is very important for Zimbabwe,” Bloch said.
Zimbabwe National Chamber of Commerce president Luxon Zembe said the reduction in arrears signifies Zimbabwe’s willingness to settle debts.
“It should alleviate pressure of expulsion since debt issues weigh more than any other issues at the IMF. We hope it will help spare Zimbabwe from expulsion,” Zembe said.