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IMF eases restrictions on Zim

Oct 31 2012 10:36 Malcom Sharare, Fin24's correspondent in Zimbabwe

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Harare - The International Monetary Fund (IMF) on Tuesday further relaxed the restrictions on its "technical assistance" to Zimbabwe.

In a press release, the IMF executive board said the move to relax the restrictions opens the way for Zimbabwe to agree on an economic programme that would be monitored by IMF staff.
"Such a staff-monitored programme would mark another significant step towards normalisation of Zimbabwe's relations with the IMF," said the executive board.
While Zimbabwe is still not able to tap IMF funding, easing the restrictions moves it in that direction, Reuters reported on Wednesday. The IMF would want to see a track record of sound policies by the unity government of President Robert Mugabe and Prime Minister Morgan Tsvangirai before it agrees to a lending programme.
Some of the areas in which the IMF would assist Zimbabwe include tax policy and administration, public financial management and financial sector reform.
In taking this decision to relax restrictions on Zimbabwe to the full extent necessary to allow for a staff-monitored progarmme, the executive board took into account a significant improvement in Zimbabwe’s cooperation on economic policies, the authorities’ efforts and renewed commitment to address its arrears problems, and Zimbabwe's severe capacity constraints in the IMF’s core areas of expertise that represent a major risk to the implementation of the government’s macroeconomic stabilisation programme.
Zimbabwe was declared ineligible to use the general resources of the IMF, and removed from the list of countries eligible to borrow resources under the Poverty Reduction and Growth Facility in 2001.

According to Reuters, the IMF suspended Zimbabwe's voting rights in 2003 over policy differences with the Mugabe government and payment arrears to the global lender. The voting rights were restored in 2010, allowing Zimbabwe to again participate in IMF decision-making.

The country faces a huge debt burden. Its total external debt is estimated at US$10.7bn, or 113.5% of gross domestic product, at the end of 2011. More than half of it is in arrears.

Zimbabwe is still emerging from a decade of economic decline and hyperinflation. The economy has slowly been on the mend since the formation of a unity government in 2009, and the government has projected growth of 8.9% in 2013.

However, there are concerns over upcoming elections due next year given Zimbabwe's recent history of violent and disputed elections.

imf  |  zimbabwe  |  economy


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