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Prosper Ndlovu, Business Editor
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.

This 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 non-cooperation 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 PRGT-eligible 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.

Indications were that Zimbabwe would have cleared arrears by year-end. External debt arrears clearance will improve Zimbabwe’s country risk premium through reducing its debt overhang.

This will also enhance the country’s access to foreign finance.

Zimbabwe had been in arrears since February 2001 and in September of that year it was declared ineligible to use the general resources of the IMF, and was removed from the list of countries eligible to borrow resources under the PRGT facility.

It is estimated that the sanctions imposed on the Zimbabwe by the West and its allies, in reaction to the land reform programme at the turn of the millennium, have prejudiced the country of up to $42 billion.

As a result Zimbabwe has not been able to honour its obligations to lenders due to suppressed economic growth linked to asset freeze by the West and its allies on key entities, travel and trade restrictions that also affected access to lines of credit to oil the economy in the last decade and a half.

Economic analyst and Bulawayo businessman Mr Obert Sibanda said the warming up of the IMF towards Zimbabwe was a significant step.

“It is quite a positive move because the IMF is a leader of multi-lateral lending institutions. Very few lending institutions were willing to support Zimbabwe as long as it had issues with the big brother, the IMF,” he said.

“If the IMF has no concerns about the country that is likely to open doors, not necessarily for them (IMF) to give money to Zimbabwe, but for other organisations to partner the country. The IMF endorsement is a huge statement.”

Last month the country paid in full its arrears to IMF in a demonstration of its commitment to restore cordial relations with the international community. “Zimbabwe is now current on all of its financial obligations to the IMF,” the global lending body said expressing willingness to normalise relations with the country and consider future requests for funding.

It, however, urged Harare to comply with other applicable IMF policies including resolving its arrears to other creditors such as the African Development Bank (AfDB), the World Bank, and other multilateral institutions, bilateral and external private creditors so as to increase its chances of funding.

The IMF also advised Zimbabwe to implement a strong fiscal adjustment and structural reform to restore fiscal and debt sustainability that would foster private sector development.

Zimbabwe has been on a vigorous re-engagement drive with the global community as part of a long-term economic strategy to secure fresh lines of credit and boost foreign direct investment.

The IMF partially lifted restrictions on technical assistance to Zimbabwe in 2012 after the country pledged to implement some reforms under its Staff Monitored Programme where it has scored major breakthroughs. The programme culminated in the October 2015 Lima agreement where a roadmap to clearing a $1.8 billion owed to the IMF, World Bank and the African Development Bank, was laid.