Donors emulate IMF credit facility

Taking a cue from the International Monetary Fund (IMF) which released US $193 million in aid to Zimbabwe last month, other donors have earmarked at least another US $141.25 to help reform a battered economy. According to news reports, the British government's Department for International Development (DFID) will contribute about US $1.25 million for the establishment of a privatisation agency to speed up the government's divestiture and privatisation efforts. The reports quoted the DFID as saying the agency will be based in the president's office. The privatisation programme, said the reports, would cover Air Zimbabwe, Zisco Steel, the National Railways of Zimbabwe, the Cold Storage Company and the Forestry Commission and timetables for their privatisation were expected to be submitted to an IMF delegation that is currently visiting the country. President Robert Mugabe's government has reportedly committed itself to accelerate privatisation to reduce the budget deficit over a three-year period. At the same time, the African Development Bank (ADB) also announced on Monday it would give Zimbabwe US $140 million to support Zimprest, the country's economic reform programme launched by Mugabe last year. ADB officials were quoted as saying the board would meet on 9 September to consider the line of credit for the country. The World Bank is also expected to release about US $200 million in financial support to help Zimbabwe deal with its economic problems, while the European Union will also release an undisclosed amount of funding to the country. John Makumbe, a political analyst, told IRIN on Monday that the flurry of aid into the country will be crucial in improving the economic situation. "These reform programmes, if implemented, have the possibility of turning around an economy that is on the verge of collapse," Makumbe said, warning that the potential for civil strife is serious in an economy characterised by high unemployment levels and an inflation rate of over 50 percent. The IMF suspended balance-of-payment support to Zimbabwe last August citing a range of governance issues. "Although political conditions are beginning to change, it remains to be seen three to six months down the line whether the government will still pursue the envisaged changes," Makumbe said.