Government under IMF debt pressure

HARARE - The government faces an uphill task of immediately raising US$129 million to repay long-running arrears to the International Monetary Fund (IMF) to enhance its chances of winning back crucial economic aid from the Bretton Woods institution.

Analysts say any new Harare administration would have to make painful decisions to clear the debt otherwise it would fall behind in its payments due to the country's crushing foreign currency crisis.

The latest information from the IMF shows that the interest component on Zimbabwe's arrears to the Bretton Woods institution stood at US$32 million.

The IMF declared Zimbabwe ineligible to use the institution's general resources in September 2001, citing the country's failure to meet its financial commitments.

Analysts this week said the new cash-strapped government will also be battling severe foreign currency problems and has to raise funds to import food to feed starving villagers, at the same time making sure it does not default on its commitment to the IMF, a move crucial in re-engaging the international community.

Following the signing of the power sharing deal between President Robert Mugabe

and the two leaders of the MDC factions on September 15, IMF managing director Dominique Strauss said the IMF stood “ready” to re-engage Zimbabwe.

“I encourage the government to take steps to show clear commitment to a new policy direction and to seek the support of the international community,” Strauss said.

“The new Government has a very difficult task of meeting all the commitments to the international community and risks alienating itself further from the rest of the world if it fails to do so,” Consultant economist John Robertson said.

The power-sharing agreement states that the parties agree to give priority to the restoration of economic stability and growth in Zimbabwe and proposes the establishment of a National Economic Council, tasked with spearheading economic recovery.

Post published in: Economy

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