Lift­ing of IMF sanc­tions on Zim­babwe ex­pected to open fi­nan­cial doors

Chronicle (Zimbabwe) - - Front Page - Pros­per Ndlovu

THE In­ter­na­tional Mone­tary Fund (IMF) has re­moved its sanc­tions on Zim­babwe a month af­ter the coun­try cleared its $107 mil­lion ar­rears to the multi-lat­eral lend­ing in­sti­tu­tion.

The land­mark move was im­me­di­ately wel­comed by the Gov­ern­ment which said the lift­ing of the re­me­dial mea­sures meant the coun­try was now el­i­gi­ble for any fa­cil­ity that is given to share­holder mem­ber coun­tries.

The In­ter­na­tional Mone­tary Fund ex­ec­u­tive board on Mon­day rat­i­fied the re­moval of the re­me­dial mea­sures ap­plied to Zim­babwe which had been in place as a re­sult of the coun­try’s over­due fi­nan­cial obli­ga­tions to the Poverty Re­duc­tion and Growth Trust (PRGT).

The mea­sures to be re­moved in­clude the dec­la­ra­tion of non-co­op­er­a­tion with the IMF, the sus­pen­sion of tech­ni­cal as­sis­tance and the re­moval of Zim­babwe from the list of PRGT-el­i­gi­ble coun­tries.

wThis comes af­ter Zim­babwe fully set­tled its over­due fi­nan­cial obli­ga­tions of $107 mil­lion to the IMF last month.

The Min­is­ter of Fi­nance and Eco­nomic Devel­op­ment, Cde Pa­trick Chi­na­masa, said the move meant Zim­babwe and the IMF had re­stored their re­la­tions.

“Be­cause of the fact that we were in ar­rears, we were not el­i­gi­ble to ac­cess any fa­cil­i­ties, which we are en­ti­tled to as a share­holder mem­ber,” he said.

“Zim­babwe is a share­holder of the IMF and as a share­holder, we are en­ti­tled to cer­tain fa­cil­i­ties which nor­mally come at good rates of in­ter­est. The rules are that if a coun­try falls into ar­rears, you can­not ac­cess those fa­cil­i­ties, they then put a dec­la­ra­tion of non-co­op­er­a­tion.”

Min­is­ter Chi­na­masa added: “What that let­ter from IMF you are now re­fer­ring to is do­ing, is to lift that dec­la­ra­tion of non-co­op­er­a­tion, which means that we are now el­i­gi­ble for any fa­cil­i­ties which are given to share­holder mem­ber coun­tries. We can now ap­ply for cer­tain fa­cil­i­ties and the ap­pli­ca­tion will be con­sid­ered on its merit. Whereas, when there was the dec­la­ra­tion of non-co­op­er­a­tion, we were not even el­i­gi­ble to ap­ply. This lift­ing of the dec­la­ra­tion of non-co­op­er­a­tion sends a very good sig­nal that we have mended our re­la­tions with the IMF.”

The IMF con­firmed the re­moval of its “re­me­dial mea­sures” in a state­ment Mon­day.

Reads the state­ment: “The ex­ec­u­tive board of the IMF ap­proved to­day (Mon­day) the re­moval of the re­me­dial mea­sures ap­plied to Zim­babwe that had been in place be­cause of the mem­ber’s over­due fi­nan­cial obli­ga­tions to the Poverty Re­duc­tion and Growth Trust (PRGT), ef­fec­tive Novem­ber 14, 2016.

“These mea­sures are: (i) dec­la­ra­tion of non­co­op­er­a­tion with the IMF (ii) the sus­pen­sion of tech­ni­cal as­sis­tance (which had al­ready been par­tially lifted), and (iii) the re­moval of Zim­babwe from the list of PRGTel­i­gi­ble coun­tries.

“This fol­lows Zim­babwe’s full set­tle­ment of all of its over­due fi­nan­cial obli­ga­tions to the PRGT of SDR 78.3 mil­lion (about US$107.9 mil­lion) on Oc­to­ber 20, 2016. Zim­babwe had been in con­tin­u­ous ar­rears to the PRGT since Fe­bru­ary 2001 and was the only case of pro­tracted ar­rears to the PRGT. Zim­babwe is now cur­rent on all of its fi­nan­cial obli­ga­tions to the IMF.”

Zim­babwe is now an­gling to re­solve its ar­rears to mul­ti­lat­eral cred­i­tors such as the African Devel­op­ment Bank (AfDB), the World Bank — both owed a com­bined sum of $1.7 bil­lion.

The coun­try scored a ma­jor break­through last year when the mul­ti­lat­eral in­sti­tu­tions agreed to its debt clear­ance plan.

In his Mid-Term Mone­tary Pol­icy State­ment in Septem­ber, Re­serve Bank of Zim­babwe Gover­nor Dr John Man­gudya in­di­cated sig­nif­i­cant progress had been made to­wards the re-en­gage­ment process to clear the coun­try’s ex­ter­nal debt ar­rears with mul­ti­lat­eral fi­nan­cial in­sti­tu­tions.

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