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Zim needs credible plan to clear arrears - IMF

Mar 04 2015 21:15

Harare - The International Monetary Fund said it would consider extending new financial support to Zimbabwe only if it agrees to clear arrears with international financial institutions.

Zimbabwe owes $9bn in external debt, half of it in arrears and has not received financial support from the IMF, World Bank and African Development Bank since 1999 due to policy differences between President Robert Mugabe and the West.

Zimbabwe's economy is slowing down due to lack of foreign investment, electricity shortages and expensive loans. Cheaper imports are damaging local industry, forcing firms to close.

READ: Grace Mugabe to start chocolate, ice-cream venture

Domenico Fanizza, who is leading an IMF team to review Zimbabwe's progress on the fund's staff programme, told a committee of parliament on Wednesday that the country was on course to meet its set targets under the programme.

Some of the targets include stabilising the financial sector, re-engagement with Western countries and reducing the budget deficit.

"We would consider financial support only when there is agreement on how to solve the arrears because otherwise we cannot do it," Fanizza said.

"We need to have a credible plan for clearing arrears."

Answering questions from the members of parliament, Fanizza said IMF shareholders like the United States who have imposed financial sanctions on Zimbabwe were unlikely to stand in the way of new funding for the southern African country.

Fanizza said Zimbabwe should open up the economy to allow greater participation by the private sector and attract foreign investment.

imf  |  zimbabwe  |  africa economy  |  debt


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