How the IMF Fixed Zimbabwe

New African, August-September 2007 | Go to article overview

How the IMF Fixed Zimbabwe


The IMF, same as the other international financial institutions, like to preach good governance, rule of law, uniformity of treatment, respecting the voice of weaker members and consensus building to developing countries. But, gauging from what the IMF has done to Zimbabwe in its years of difficulty, the Bretton Woods institution has exposed itself as a preacher who hardly practises what it preaches. Below is how the IMF fixed Zimbabwe in the interests of super-power politics.

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8 March 2006. IMF press release No. 06/45. IMF Executive Board upholds sanctions against Zimbabwe.

[ILLUSTRATION OMITTED]

The Executive Board of the International Monetary Fund (IMF) met today to review Zimbabwe's overdue financial obligations to the Fund and consider the sanctions imposed on Zimbabwe. The Board noted that as a result of Zimbabwe's full settlement of its arrears to the IMF's General Resources Account (GRA), the managing director had withdrawn his complaint with respect to compulsory withdrawal.

Following the discussion, the Executive Board decided to restore Zimbabwe's voting and related rights and not to terminate its ineligibility to use the GRA at this juncture.

The Board also considered issues related to Zimbabwe's outstanding arrears to the Poverty Reduction and Growth Facility (PRGF)-Exogenous Shocks Facility (ESF) Trust Fund. It noted that Zimbabwe's economic crisis calls for urgent implementation of a comprehensive policy package, comprising several mutually reinforcing actions in the area of macro-economic stabilisation and structural reforms.

The Board urged Zimbabwe to continue its efforts to resolve the remaining overdue financial obligations to the PRGF-ESF Trust, and agreed that the Fund will consider further Zimbabwe's overdue financial obligations to the PRGF-ESF Trust within six months of the date of this decision.

Because the GRA and PRGF arrears are subject to separate legal frameworks, the various decisions taken by the Executive Board to address outstanding arrears to the PRGF-ESF Trust remain in place. Therefore, Zimbabwe remains excluded from the list of PRGF-eligible countries.

Zimbabwe has been in continuous arrears since February 2001 and is the only case of protracted arrears to the PRGF-ESF Trust, which currently amount to SDR83m (about US$119m).

On 3 December 2003, the IMF had published the following press release (No. 30/210), setting out its "charge sheet" against Zimbabwe:

The Executive Board of the International Monetary Fund (IMF) today reviewed Zimbabwe's overdue financial obligations to the Fund and decided to initiate the procedure on the compulsory withdrawal of Zimbabwe from the IMF, after having determined that Zimbabwe had not actively cooperated with the IMF.

The IMF regrets that the authorities have not adopted comprehensive and consistent policies needed to address Zimbabwe's serious economic problems.

Economic and social conditions in Zimbabwe have continued to deteriorate during 2003. GDP has declined by about 40% during 1999-2003, and inflation rose to 526% in October 2003, fuelled by monetary expansion and a depreciating parallel market exchange rate.

Poverty and unemployment rates have continued to rise, Zimbabweans suffer from one of the highest HIV/Aids infection rates in the world, and the population faces shortages of basic products, including fuel and medicines. The adverse effects of the land reform and a drought left two-thirds of the population in need of food aid in 2002/03, and no significant improvement is expected in the remainder of 2003/04.

The World Food Programme has appealed for food aid for Zimbabwe, but pledges up to this point meet less than half of the estimated requirements through April 2004.

IMF executive directors urged the [Zimbabwean] authorities to strengthen cooperation with the Fund and to adopt a comprehensive adjustment programme that would arrest and reverse Zimbabwe's continuing economic decline. …

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