THE International Monetary Fund (IMF) on Friday restored Zimbabwe’s voting and related rights after a suspension of nearly seven years but said Harare is still ineligible to access loans without clearing arrears to the fund.

Zimbabwe’s voting rights were suspended in 2003 due to the country’s overdue financial obligation to the IMF. The landmark decision would have made Zimbabwe eligible to use resources from IMF’s General Resources Account (GRA) but its arrears under the fund’s Poverty Reduction and Growth Trust (PRGT) mean the country has to wait for another day.

Zimbabwe owes IMF US$140 million under the PRGT.

IMF said Zimbabwe had to adopt a track record of sound policies to access the global lender’s money.

“Access to IMF lending resources is also subject to IMF policies on the use of such resources, including a track record of sound policies and the resolution of arrears to official creditors, which would require donor support,” the global lender said.

Friday’s decision followed intense lobbying by Finance minister Tendai Biti (pictured) for Zimbabwe to become a full member of the 184-member organisation.

Biti toured Western capitals in recent months to drum up support for the restoration of the voting rights.

Zimbabwe needed at least 70% of the vote and with the leading nations such as the US, UK and Germany having pledged to support the country, Friday’s meeting was reduced to a mere formality.

The IMF said any remaining issues on further normalisation of relations between Harare and Washington will be addressed over time.

A number of remedial measures remain in place as Zimbabwe still has outstanding arrears to the PRGT.

The remedial measures include the declaration of non-cooperation; suspension of IMF technical assistance, except in targeted areas; and the removal of Zimbabwe from the list of PRGT-eligible countries.

Zimbabwe has been in continuous arrears to the fund since 2001 and was declared ineligible to use resources under the then Poverty Reduction Growth Facility.

The country was nearly expelled from IMF in 2005 but made a huge payment a week before the board meeting to determine the country’s fate.

Arrears under the general resources account were cleared in 2006.

In an interview with Reuters in Washington Biti said key donors like the US and Britain made strong statements of support for Zimbabwe during the IMF meeting but want to see more political and economic reforms.

“It’s a major indicator that if we continue on the path of reform, on the path of stabilisation, and policy consistencies, we can achieve full reintegration and full support,” he said.

Biti said without addressing the country’s debt burden, Zimbabwe will be unable to recover.

Zimbabwe has an external debt of US$5,7 billion and is haggling on how to resolve the issue.

MDC-T says Zimbabwe can get debt cancellation under the Heavily Indebted Poor Country (HIPC) initiative.

Zanu PF believes the country is too rich to be poor and can use its vast resources to pay the debts.
Biti said it would be “immoral to take any dollar of our meagre resources” to pay off the unsustainable debt.

“It is self-evident that we have to come to an understanding with the creditors and partners on our debt,” Biti said.

But he said Zimbabwe has to establish a track record of good economic and political decisions to win donor support for debt cancellation.

Analysts say were the IMF to open lines of credit, the move would trigger other donors to pour money into Zimbabwe.

“IMF gives a seal of approval and all major donors will take a cue from IMF. It is a disciplinarian of last resorts,” a bank economist said.

Bulawayo-based economic commentator Eric Bloch told The Standard the restoration of the voting rights is “a superficial step” forward adding that full benefits can be realised once the country clears its arrears to the fund.

“It may help open doors slightly towards HIPC,” he said.

For a country to benefit under HIPC initiative it should be an International Development Assistance (IDA) -only and Poverty Reduction Growth Facility eligible and should have per capita income of less than US$1 095 among other conditionalities.

The inclusive government has brought confidence in the economy leading to price stability.

Since the use of multiple currencies last year, hyperinflation has been tamed from 231 million % in July 2008 to -4.8% last month.

BY OUR STAFF

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