IMF approves stand-by credit

The International Monetary Fund (IMF)has approved US $193 million in stand-by credit for Zimbabwe, ending nearly two years of waiting. A statement released by the IMF said that the funding "was designed to support the nation's economic programme over the next 14 months." It said that US $24 million would be available immediately, and a further US $9.7 million after 16 August. It added that any further disbursement would be "made available on the basis of Zimbabwe's meeting performance targets and the completion of program reviews." Deputy Director of the IMF, Shigemitsu Sugisaki, said the directors of the fund had emphasised the importance of macro-economic stabilisation and economic reforms. Sugisaki said that one of the most immediate challenges facing Zimbabwe would be the ability to stabilise its exchange rate and bring inflation under control through the tightening of its financial policies. "Strong and sustained commitment and broad consensus on economic reforms will be critical to re-establish the conditions for enhanced growth, address unemployment and poverty issues, and set the stage for the provision of broader support from the international financial community," Sugisaki said. The statement said that the directors "noted the risks that Zimbabwe's military involvement in the Democratic Republic of the Congo (DRC) posed to fiscal and balance of payments performance, and the stabilisation effort more generally." The IMF said that the government's ability to reduce its wage bill in the public sector and reduce military spending would be essential in helping to redirect funding towards key sectors such as education and health care. In a letter of intent to the IMF dated 16 July, the Zimbabwe government said that its macro-economic objectives for 1999 were to achieve a Gross Domestic Product (GDP) of 1.2 percent and reduce inflation to about 30 percent. Recent figures indicated that inflation in Zimbabwe had hit an all time high of 52 percent.