IMF not prepared to resume loans to Zim

We are not yet at the point where resuming lending is possible, IMF boss Dominique Strauss-Kahn told reporters after a two-day visit to South Africa last week. Strauss-Kahn said he discussed Zimbabwe during his talks last Tuesday with South African President Jacob Zuma, who said that aid should resume flowing to Harare. We are happy to help. We are ready to help, but as long as the political situation will not make it possible to come back on track in terms of arrears and governance, it will be very difficult for us to come back, Strauss-Kahn said.

Zimbabwe owes about 140 million dollars in arrears to the IMF. The IMF last month restored Zimbabwes voting rights, but said the impoverished country would not be able to access loans until the arrears are settled. Harare had its voting rights suspended by the IMF in 2003 over policy differences with President Robert Mugabe’s previous government and outstanding arrears to the IMF. The country is emerging from a decade of economic decline, which critics of Mugabe blamed on his land reform policies and economic mismanagement that led to hyperinflation.

Since the creation of the unity government a year ago, Zimbabwe’s economy is showing signs of recovery with gross domestic product growth at a better-than-expected 4.7 percent in 2009. Zuma, southern Africas mediator in Zimbabwe, has called on Western nations and multi-lateral lenders to resume aid to the Harare unity government.

The European Union and United States of America have refused to provide direct financial support to the Harare government saying the administration must first speed up democratic reforms, act to uphold the rule of law, basic rights and freedoms before they can loosen the purse strings.