Government stops repayment of all foreign debts

The government of Zimbabwe has stopped repayments of all foreign loans, including those owed to the IMF, and is using the little foreign currency that trickles into Zimbabwe to meet payments for fuel and electricity imports, authoritative financial sources told the ‘Financial Gazette’ this week. The government reportedly owes more than US $4.5 billion to several multilateral institutions and Western countries. These include the African Development Bank (ADB), the European Investment Bank (EIB), the World Bank, the US, Britain, France Germany and Finland. While in the past year the government had struggled to meet its debt obligations, with repayments to some creditors being halted last year, it had maintained payments to the IMF. The IMF’s representative to Zimbabwe confirmed to Reuters that the Southern African country was late in its debt repayments to the fund. The representative, Gerry Johnson, said that Zimbabwe had accumulated arrears amounting to US $25 million since February, but had indicated it was working on the problem. In response, Zimbabwe sharply criticised the IMF and the World Bank on Thursday, saying they pursued political objectives of donor countries rather than helping the poor of the developing world. “They cannot meet the objectives of poverty alleviation and debt relief for the poor countries as long as they put the political interests of the donors first and as long as they retain the weighted voting system,” Zimbabwean foreign affairs senior secretary Willard Chiwewe said in a prepared speech. The IMF and other development institutions and donors have cut aid to Zimbabwe over the government’s failure to uphold the rule of law, its controversial land policies, its mismanagement of the economy and its involvement in the costly Democratic Republic of Congo (DRC) civil war. Suspension of balance-of-payments support by the IMF has exacerbated a biting foreign currency crisis in the country, whose economy is seen declining by nearly 10 percent this year versus about 6 percent in 2000. Fuel remains in short supply because of the shortage of foreign currency, even as the hard cash-spinning tobacco selling season is in progress.