Zim must pay up: IMF

Zimbabwe must pay $55 million to the International Monetary Fund this year to enhance its chances of winning back crucial economic aid from the Bretton Woods institution.

However, analysts say the beleaguered Harare administration could again struggle to clear the arrears due to a crushing foreign currency crisis.

The government, which has constantly defaulted on its commitments to the IMF and other multilateral financial institutions, has forked out $140 million from its Special Drawing Rights to meet scheduled financial obligations. If Zimbabwe clears its arrears, it will be eligible for desperately needed economic aid.

The GNU says it needs at least $10 billion to tackle economic ruin and put the country on a firm path to recovery and reconstruction. The latest information from the IMF shows that the southern African country's arrears to the Bretton Woods institution now stands at US$55 million.

The IMF urged Harare to clear the arrears. Clearing the debt also gives Zimbabwe access to $102 million that was placed in escrow until Zimbabwe clears its debt. The latest payment by Finance minister Tendai Biti was taken from IMF special drawing rights to Zimbabwe under a $250 billion global agreement to bolster the reserves of the IMF's 186 member countries in the wake of the worldwide financial crisis. Zimbabwe has made payment under the IMF's Poverty Reduction and Growth Trust.

Analysts this week said the cash-strapped government, battling severe foreign currency problems, would most likely continue to default on its commitment to the IMF and further alienate the country from the international community.

IMF said: "Co-operation on payments remained poor, cooperation on policies improved in 2010 before policy setbacks in 2011 cast significant uncertainties on economic prospects".

University of Zimbabwe business lecturer, Anthony Hawkins, said the government might decide not to honour its remaining obligations to the Fund, preferring to meet pressing requirements and other essential imports this year.

"I don't think there is any intention of paying the outstanding amount," Hawkins told The Zimbabwean.

Consultant economist, John Robertson, said: "The government has a very difficult task of meeting all its commitments to the international community. We have been alienated from the rest of the world."

Biti said Zimbabwe was on a cash budget, "so this means we are not going to pay off arrears or carry out some of the capital expenditure projects lined up for the year".

He said government was collecting 35 percent below targeted revenue, and there was no money to clear off the arrears.

Post published in: Business

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