Zimbabwe’s repayment
of arrears owing to
the International
Monetary Fund’s
Poverty Reduction and Growth
Trust (PRGT) is a first step
towards the unfreezing of aid
and loans to the country – but
there is still a long way to go
before import volumes start
growing.
IMF “remedial measures”
designed to encourage
Zimbabwe to settle its arrears
were lifted in December 2016,
after the country paid around
US$107.9 million in October
in what was in effect a paper
transaction.
According to the IMF the
Zimbabwean authorities
cleared the arrears using the
country’s SDR holdings.
“In doing this, Zimbabwe
has simply transferred its
SDR (Special Drawing Right)
holdings in order to settle its
obligations with the IMF. The
arrears are not being paid
with loans contracted by the
Zimbabwean authorities.
“Notwithstanding the
settlement of overdue financial
obligations to the PRGT
and the removal of remedial
measures, consideration of
any future request for IMF
financing would also require
Zimbabwe to comply with
other applicable IMF policies,”
says the IMF in a statement.
One of the conditions is that
Zimbabwe resolve its arrears
to other creditors.
The country still owes
some US$1 156.7 million for
loans from the International
Bank for Reconstruction and
Development (IBRD) and
International Development
Association (IDA), as well
as US$632.5 million to the
African Development Bank.
The biggest outstanding
loan is US$1.16 billion from
the World Bank.
Zimbabwe needs aids
or loans to help revive the
economy, which has been
hit by a combination of
insufficient policy adjustment,
and exogenous shocks (a
drought, lower commodity
prices, and the appreciation of
the US dollar), according to an
IMF report.
“The resulting cash
shortages have led the
authorities to delay wage
payments, restrict imports,
require export surrenders, and
announce the issuance of bond
notes backed by an external
credit facility.
“The extremely difficult
situation has been exacerbated
by political uncertainty, social
unrest, and loss of confidence,”
the report adds.
IMF arrears payment opens way for new support
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