IMF hints at Zim credit lines
THE IMF could reopen lines of credit to Zimbabwe in 2016 if Harare completes the ongoing Staff Monitored Programme and a comprehensive plan to clear its arrears.
This would mark the financier’s first loans to Zimbabwe in 17 years.
The SMP is an informal government/ IMF agreement to monitor implementation of a country’s economic reforms.
Completion of Zimbabwe’s SMP in December 2015 will see the IMF unveil a new three-year programme under which funding is likely to be unlocked.
This programme could also expand Zimbabwe’s funding sources to the World Bank and the Africa Development Bank, as both have the same benchmarks as the IMF.
The country owes the IMF, World Bank and AfDB US$ 110 million, US$ 1,2 billion and US$ 600 million respectively, and is paying US$ 150 000 monthly to the IMF.
IMF assistant director Mr Domenico Fanizza told The Sunday Mail that the multilateral lending institution could loosen its purse strings if Zimbabwe formulated a comprehensive payment plan.
Mr Fanizza was in Harare last week to review SMP implementation progress with Government officials. “Basically, the country has to successfully implement the Staff Monitored Programme first. Once this is done, the IMF will then come up with a new programme for reforms for Zimbabwe.
“Under this new programme, which will be put in place next year, it is possible (to get funding), if (Zimbabwe) meets the requirements to do so. I need to reiterate the word “could” because this can only happen if the country is able to address its issue on arrears.”
He also said: “You cannot access funding because of your present arrears; that is the position that should be made clear. However, if you are able to come up with a plan, a clear development plan of paying the arrears, the IMF could consider a new programme for broader economic reform. That programme could mean financial support. It is complex, but possible.”
Zimbabwe’s arrears to the IMF began accruing in 2001 as escalating and competing national demands strained available resources.
The IMF executive board subsequently declared Harare ineligible for general resources and delisted it from the Poverty Reduction and Growth Facility.
In 2002, this board adopted a declaration of non-co-operation and suspended technical assistance, and then suspended Zimbabwe’s voting rights in 2003. Concurrently, the US Government imposed a sanctions regime barring American executives at multilateral lenders from extending lines of credit to Zimbabwe.
In 2006, Government settled all General Resources Account arrears, prompting the IMF to consider restoring voting and related rights. Technical assistance was reinstated in 2009. Reserve Bank of Zimbabwe Governor Dr John Mangudya is scheduled to visit Europe to discuss strategies on clearing the country’s external arrears.
In October, the IMF and World Bank hold their annual conference in Peru where the matter will be discussed further.