IMF Board removes remedial measures placed on Zimbabwe
The International Monetary Fund (IMF) has removed remedial measures it had placed on Zimbabwe after the country fell into arrears with the bank’s Poverty Reduction and Growth Trust (PRGT).
Zimbabwe had been in arrears with the PRGT since 2001 but managed to clear its overdue financial obligations last month as it pursues a re-engagement process with global lenders.
Measures to be removed include declaration of noncooperation with the IMF, the suspension of technical assistance (which had already been partially lifted) and the removal of Zimbabwe from the list of PRGT-eligible countries.
“This follows Zimbabwe’s full settlement of all of its overdue financial obligations to the PRGT of SDR 78.3 million (about $107.9 million) on October 20, 2016,” the bank said following a meeting of its executive board.
“Zimbabwe had been in continuous arrears to the PRGT since February 2001 and was the only case of protracted arrears to the PRGT. Zimbabwe is now current on all of its financial obligations to the IMF.”
However, the bank said despite the settlement of the arrears and the removal of remedial measures, consideration of any future request for IMF financing would require Zimbabwe to comply with other applicable IMF policies.
These, the bank said, included resolving arrears owed to other multilateral creditors including the African Development Bank (AfDB), the World Bank, bilateral official creditors, and external private creditors (if any).
“(Zimbabwe should also) implement strong fiscal adjustment and structural reforms to restore fiscal and debt sustainability and foster private sector development,” the bank said.
Early this year, Zimbabwe successfully met targets set under the IMF’s Staff Monitored Program (SMP), a reform plan Harare undertook to kick-start normalization of ties with the bank.
Under the SMP, Zimbabwe committed to undertaking reforms such as consolidating its fiscal position so that more resources are allocated towards areas including infrastructure and social spending, clarifying the indigenization program and restoring confidence in the financial services sector.
Zimbabwe now owes the AfDB and the World Bank $1. 7 billion in arrears after it cleared its arrears with the IMF.
The country is actively pursuing an arrears clearance plan, dubbed the Lima plan, which was agreed to in October 2015 in Peru, by the IMF, World Bank and the AfDB.
Zimbabwe’s arrears with the three preferred creditors have resulted in the country failing to access new credit lines from the global lenders.
The lack of access has also been compounded by sanctions imposed on the country by the United States and the European Union due to differences over a land reform program Zimbabwe implemented to address colonial land imbalances.