A high level IMF delegation was in Zimbabwe for the annual Article IV Consultations. They held discussions with several individuals including ministers.
“Yes we met with the IMF in Harare,” said a senior official from the Business Commission of Zimbabwe, which is led by David Govere and represents all business organisations.
“They said Zimbabwe must clear all outstanding IMF arrears and get its economy back on track.”
The news comes hardly a week after President Robert Mugabe castigated Minister of Finance, Tendai Biti, accusing him of sidelining the “City of Kings” – Bulawayo.
“If Bulawayo dies then all of Zimbabwe dies,” Mugabe said in Bulawayo before dashing off to Rio De Janeiro in Brazil to attend the three-day Summit on the Environment.
“I asked Biti what he had done with the $500,000 we had been given by the IMF and he said he only had about $100,000 left. We should have used that money to bring the businesses in Bulawayo up to standard because most of them were closed.”
An economist said $500,000 would hardly be enough to re-equip one company. Mugabe also took a swipe at the IMF, accusing it of sidelining developing nations.
Numerous politicians and business executives have accused Mugabe’s government of ignoring Bulawayo over the years.
The IMF has said several issues needed to be sorted out including structural impediments, the acceleration of indigenisation in mining and other sectors, property rights and political uncertainty.
It said it was worried about higher than anticipated increases in imported food and fuel prices as well as the financial system where most commercial banks were under-capitalised.
“Zimbabwe does not have the capacity to pay off the IMF’s arrears from its own resources,” Biti said in Harare. “We will need to request cooperating partners for a concessional bridging loan or grant to settle the arrears.”
Clearance of the arrears would unlock new financing arrangements from the IMF, which would then be used to repay the bridging loan obtained from the cooperating partners.
Zimbabwe owes multilateral institutions a grand total of $2,504 billion, including $1,126 billion to the World Bank, $529 million to the African Development Bank and $221 million to the European Investment Bank.
Post published in: Business