We applaud the International Monetary Fund for refusing to yield to the manipulative tendencies of the United States of America which continues to pursue a scorched earth hardline foreign policy on Zimbabwe. The US appears intent to keep tightening the screws on Harare and has been pressuring the Bretton Woods Institutions to withhold new funding for Zimbabwe even though the country has been religiously following an IMF staff monitored programme which is close to yielding results. Both the IMF and the World Bank are keen to see Zimbabwe getting its economy back on a sound footing and have been working closely with the Minister of Finance and Economic Development, Cde Patrick Chinamasa to craft a turnaround strategy. Zimbabwe and the World Bank have stepped up efforts to hammer out a financing programme which could see the country accessing funding from the institution should a debt clearance plan agreed with three major lenders be successfully executed.
A World Bank team was in Zimbabwe earlier this month to intensify contact with authorities over a country strategy that would provide a framework for the institution’s relationship with Harare over the next few years. The World Bank team brainstormed on a country financing programme with priority sectors being infrastructure, agriculture, mining and manufacturing. Zimbabwe’s relations with the World Bank and IMF have improved considerably over the past six years. The country stopped servicing its loans in the late 1990s as its economic challenges worsened and has been unable to access fresh loans from global lenders since then.
However, in October the country agreed to a debt plan which will see $1,8 billion in arrears owed to the World Bank, IMF and African Development Bank (AfDB) being cleared this year. Its Arrears Clearance Strategy entails using Special Drawing Rights to settle outstanding payments (US$100 million-plus) to the IMF, “a bridge loan” to clear African Development Bank debts ($600 million) and medium to long-term loan facilities to settle World Bank arrears ($1,1 billion).
The strategy will be backed by “bold policy reform measures aimed at debt sustainability and improving the socio-economic environment” that include “strengthening financial sector confidence, accelerating the re-engagement process with the international community and revitalising agriculture and the agro-processing value chain”.
This will unlock fresh funding from the global lenders and significantly improve the country’s credit ratings. For an economy that contracted by as much as 52 percent between 1998 and 2008, Zimbabwe has shown remarkable tenacity to gradually get its economy working again. We therefore welcome the IMF’s decision to give Zimbabwe an opportunity to access new funding should it fulfil the Arrears Clearance Strategy that its executives accepted in Lima, Peru in October last year. According to our sister paper, The Sunday News, the IMF said it would not be influenced by American calls to tighten sanctions on Zimbabwe and will proceed with its re-engagement with Zimbabwe as planned. About two weeks ago, US senator Bob Corker wrote to US treasury Secretary Jacob Lew saying Washington should pressure the IMF and World Bank not to lend money to Zimbabwe until American-prescribed conditions were met.
Among the conditions were security sector “reforms” and reversing land reforms, all opposition mantras feeding from ZDERA, Washington’s sanctions law on Zimbabwe.
Responding to inquiries from our Harare Bureau, IMF Zimbabwe head Christian Beddies said experts from the multilateral lending institution would visit Harare next week to assess implementation of the last phase of the Staff Monitored Programme (2013-2015). He said Zimbabwe would access new money if it fulfilled the Arrears Clearance Strategy that IMF executives accepted in Lima, Peru in October 2015.
“I think everybody is entitled to have a view on issues pertaining to an institution they’re a member of. My interpretation of what the Senator said was that new financing should be subject to reforms, which, by the way, applies to any country that the IMF has a financial arrangement with.
“What these reforms could look like is an area subject to discussion. (Accessing new money from the IMF) will depend on the execution of the Arrears Clearance Strategy that the authorities presented in Lima in October 2015, and the drawing up of a strong economic reform programme that could be supported with Fund resources,” Beddies said.
“The upcoming Article IV consultation provides an opportunity to discuss how such cooperation could look like. The eight-member mission, led by our Mission Chief, Mr Domenico Fanizza, will be in Harare from February 24 to March 11, 2016.
“The mission will undertake the third and final review of the Staff Monitored Programme and the Annual Article IV consultation. The Article IV consultation is an exercise where we step back a little from the day-to-day challenges and provide a medium term assessment of the economy, in consultation with the authorities.”
We hope the IMF team will be satisfied with the progress Zimbabwe has made in adhering to its programme.