Tough assignment for Biti . as IMF arrears hit US$144m

Latest IMF figures show that Harares arrears with the Washington-based multilateral lending agency amounted to US$143.9 million as at the end of October and were costing the country nearly US$10 million in interest.

The increase in the outstanding loan repayments came as Zimbabwe has failed to honour a pledge made in April this year to pay US$100 000 every three months starting in July towards clearing its arrears to the Bretton Woods institution which then stood at about US$133 million.

The country has made two payments to the Bretton Woods institution amounting to about US$690 000 since the last review by the IMF board in January.

The Bretton Woods institution did not respond to questions sent last week by The Zimbabwean concerning the course of action it would take to ensure the southern African country acted on its ballooning debt arrears.

Zimbabwe has been in continuous arrears to the IMF since February 2001 and is the only case of protracted arrears to the Poverty Reduction and Growth Facility-Exogenous Shock Facility (PRGF-ESF) Trust.

The remedial measures that have been imposed on Zimbabwe with respect to these arrears are the suspension of technical assistance (now partially lifted), the removal of Harare from the list of PRGF-ESF-eligible countries.

The IMF executive board however lifted the suspension of technical assistance to Zimbabwe in May when it announced it would assist the country in targeted areas.

The decision to offer technical assistance also followed consultations after Prime Minister Morgan Tsvangirai took office in February in a unity government with long-time foe President Robert Mugabe, whose government was shunned by the international community and narrowly averted expulsion from the IMF over arrears.

Tsvangirai has made a priority of trying to restore ties with international lenders and the IMF sent a mission to Zimbabwe just one month after he took office.

The IMF mission was the first to Zimbabwe since 2006, when Mugabe’s government narrowly averted expulsion from the body over arrears.

The fund has long criticised Mugabe’s economic policies but had praise for the efforts of the new unity government.

At least four IMF technical missions have visited Zimbabwe since May to assist the country improve central bank governance and restore confidence in the banking sector.

How the government is going to tackle the IMF arrears is expected to feature prominently in the 2010 national budget to be unveiled on Thursday by Finance Minister Tendai Biti.

The IMF has previously said Zimbabwe would only get much-needed economic aid once it clears its arrears.

Resumption of IMF aid would be seen by Western donors as a cue to also resume budgetary support for the Harare government which has struggled since the beginning of the year to raise about US$10 billion to revive an economy battered by mismanagement and international isolation.