No reforms, no money: IMF

HARARE - The International Monetary Fund (IMF) has insisted that President Robert Mugabe’s government will not receive any fresh capital until it repays all its debts and implement key economic reforms.

This was after the cash-strapped country last week cleared its 15-year-old $107,9 million arrears to the international money lender —– prompting the government to think it was now closer to getting new financial assistance from the IMF.

However, IMF spokesperson Gerry Rice on Friday said the cash-starved and drought-stricken nation was still miles away from accessing new loans.

“…the clearance of those arrears with the World Bank, the African Development Bank, the European Investment Bank, and others would be an important consideration for us in terms of moving forward with any support, any possible support for Zimbabwe,” he said.

“The settling of their arrears with the Fund, as you say, does not automatically provide Zimbabwe with access to IMF financing,” Rice added.

The IMF spokesperson noted that there were a number of steps that need to be taken before Zimbabwe qualifies for loans.

“It requires a decision by our board to lift the remaining remedial measures that had been imposed on Zimbabwe because of the arrears.

“I can go into the detail of those remedial measures if it’s helpful to you, but there are those remedial measures to be lifted. That’s the decision of the board, and then there’s also the issue of the clearance of arrears with other institutions.

“So a number of steps here before we would be considering any kind of financial assistance to Zimbabwe,” he said during a media briefing.

Information gathered by the Daily News on Sunday shows that the IMF’s executive board will only release its financial choke-hold once Zimbabwe pays off $601 million to the African Development Bank, $1,1 billion to the World Bank, and $240m to the European Investment Bank (EIB).

Zimbabwe, which is gripped by drought and possibly on the verge of total economic collapse, was recently awarded a $91,2 million package by the IMF that had been held for seven years pending the settlement of arrears to the financial institution.

Bretton Woods institutions — including the World Bank, the IMF and African Development Bank — froze their financial assistance to Zimbabwe in 1999 when the nation defaulted.

Western governments also imposed sanctions on Harare in 2001 over allegations of vote-rigging and human rights abuses.

In 2014, the IMF stated the government needed to pay off its arrears and restore confidence by implementing economic reforms, social development and poverty eradication programmes if it was to be awarded financial assistance to avoid an economic catastrophe. It has now emerged that, after drawing down its special drawing rights (SDR) holdings held at the IMF, Mugabe’s government was able to clear $107,9 million of arrears to the fund’s Poverty Reduction and Growth Trust (PRGT), and was granted access to $91,2 million.

Created by the IMF, SDR is a supplement to the existing reserves of member countries and acts as an artificial currency.

After paying off its PRGT debt, Zimbabwe now has a balance of about $110 million in SDR holdings.

Economic experts who spoke to this publication agreed with Rice and said the recent clearance of arrears to the IMF will not translate to immediate capital and financial support from the Bretton Woods Institution.

“This was not our money to begin with, we got special permission from the IMF to use the money initially meant for development financing,” economist John Robertson said.

“It really is no big deal because it is just a fraction of the $1,8 billion arrears supposed to have been paid to these institutions before the year ends and from what I gather they are struggling to raise the money,” the respected analyst added.

International think-tank, NKC African Economics (NKC), noted that while the move paved way for re-engagement, the country still had a long way before accessing funding from international financiers.

“Zimbabwe’s enormous external debt overhang is impeding its access to the external financing necessary to stabilise the macroeconomic environment.

“Clearing outstanding arrears will pave the way for the country’s re-engagement process with external financiers and will open the taps to fresh funding,” the Oxford Economics company said.

“That said, the settling of the IMF obligation does not immediately translate to fresh funding from the multilateral organisation as it has reiterated that a credible plan to clear arrears with other international financial institutions and bilateral creditors is a prerequisite for access to the Fund’s resources,” NKC added.

Oxford University lecturer Blessing-Miles Tendi, said repaying debt alone may not be sufficient for the big three multilateral lenders to bring Zimbabwe back into the international financial fold.

“The key thing is that it is going to require a wide set of reforms in addition to just paying up debt for the IMF to free up financing.

“The ruling Zanu PF party has proven unable so far to engage in any kind of meaningful reform,” he said.

Comments (11)

this article sounds like its gud for zimbabwe to remain marooned on the pedestal of economic hardships!

SaManyika Chaiye - 31 October 2016

Well Mr U.N . No money no elections.Who will finance the elections.If yu dont help our economy to grow therefore there will not be any funds for elections bt to feed pple.Reforms are very good bt for now our economy takes centre stage,we need to finance the economy then elections.During elections ,police need to be paid ,civil servants need pay ,all that money.Economic reforms are necessary if there is an economy to talk about,rite now there is non.Pour in money then we reform the economy.

viola gwena - 31 October 2016

we can sell Kasukuwere,s mansion and pay those institutions or kanjani bafethu

safa ngendlala - 31 October 2016

arrest corrupt officials now and send them to jail no matter which political party they belong to . we ordinary Zim we r suffering yet some r stealing millions of billions of dollars .

safa ngendlala - 31 October 2016

@Viola msunuwebhare no money will be paid and your stupid party will crumble and your stupid country will go the dogs kkk. Until uMnangagwa aze afe

Bolo - 31 October 2016

sell kasukawere's mansion! yaa thats a start. ..

Young Zimbo - 31 October 2016

There is more than enough money to pay our arrears, only its in personal accounts.Arrest the criminals, recover the stolen money and pay your arrears, full stop.

Jonso - 1 November 2016

i think a GNU maybe a better option than chaotic elections that end up with people maimed ,butchered and still with no results ,or stolen results.Where is the money to run elections ,.They cant even pay civil servants,

gandanga - 1 November 2016

mari yacho ndeyamai vako here, jus giv us the money coz suffering in Zim is realy not a joke

taps - 3 November 2016

@ viola gwena,i think you are kasukuwere's girl friend,your langauge sounds as you are always with him. We need both economic & electoral reforms at all cost for hour economyto recover. You want to take the money & squander it with your kasukuwere !

Benito - 6 November 2016

The international community and their statutes are not mad guys,they know wat theymean and implications when they say economic reforms first.seriously they will be stupid to lend money to a country that is suppose to benefit from $15 billion worth of diamonds but it jus dissappears jus like that.....

Ajunior - 7 November 2016

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