'Don't pop champagne yet'

HARARE - Zimbabwe has been warned against celebrating the recent lifting of International Monetary Fund (IMF) remedial measures imposed on the country nearly 15 years ago. 

This was after the global moneylender this week eased sanctions on the economically-stricken nation when Zimbabwe paid its overdue $107,9 million obligations to the Bretton Woods institution.

Economic experts, however, said the latest move does not mean that President Robert Mugabe’s government is now eligible for new funding, which the country’s desperately needs to revamp its dying economy.

European Union (EU) ambassador Phillipe Van Damme, yesterday told the businessdaily that while the lifting of remedial measures was commendable, government still needed to correct macro-economic imbalances and engage its other creditors.

“The IMF’s move is a standard procedure that happens after a member country clears arrears, but it does not mean that the IMF is now in a lending mood,” he said.

“What should be taken from the development is that it is a step in the right direction for the country’s re-engagement efforts.

“However, of importance is the economic situation. It needs immediate attention,  so government must also give special attention to this area,” Van Damme added.

The EU envoy said the European Investment Bank — owed over $280 million by Zimbabwe — would also move in the same direction if Zimbabwe cleared its arrears with the Paris Club lender.

Veteran economist John Robertson concurred with Van Damme and said Zimbabwe was still a long way off from receiving international support.

“Yes, it is not much but it’s definitely something. It took a long time for the country to re-pay the arrears, so the move is definitely positive. However, given all this, the government now needs to focus on the economy and ensure there is an outlook turnaround,” he said.

Presently, Zimbabwe has $601 million arrears to the AfDB, the World Bank’s International Development Association is owed $218 million with the International Bank for Reconstruction and Development owed an additional $896 million while the Paris and  non-Paris Club members are owed close to $4 billion.

International think tank, NKC African Economics (NKC), said the removal of the remedial measures meant that the IMF would resume non-funding support to Zimbabwe.

“The country needs a credible plan to clear arrears with other international financial institutions and bilateral creditors, accompanied by fiscal reforms to access the fund’s resources.

“Re-engaging with external financiers could open the taps to fresh funding. Zimbabwe’s enormous external debt overhang is impeding its access to the external financing necessary to stabilise the macroeconomic environment,” NKC said.

The Oxford-linked research firm also pointed out that Zimbabwe was in the process of engaging the African Export-Import Bank (Afreximbank) for bridge financing to clear the AfDB loan.

“...which will not reduce the country’s external debt, but rather increase it. Zimbabwe should use domestic resources in addressing its debt overhang, accompanied by fiscal consolidation,” said NKC.

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