IMF negotiations continue

The International Monetary Fund (IMF) is to continue negotiations with the Zimbabwean government on economic reforms to get the country back on track. IMF spokeswoman Gita Bhatt told IRIN on Tuesday that the Fund's mission to Zimbabwe had been extended, and that "the team is likely to stay on until Friday in order to finish a report to management ahead of the board meeting on 9 September". Zimbabwe was suspended from the IMF and faces expulsion for non-payment of arrears when the executive board meets. Bhatt said the staff mission currently in Harare would "update information on recent economic developments, as well as on policy initiatives that the authorities plan to implement in the period ahead". Zimbabwe has been in continuous arrears to the Fund since February 2001, and about US $295 million was outstanding at 22 August. The IMF's executive board extended a lifeline on 16 February this year, when it postponed its deliberations on Zimbabwe's "compulsory withdrawal" from the Fund for six months. However, to unlock potential foreign aid the country had to strengthen its cooperation with the IMF - something that had yet to happen, said Zimbabwean economist John Robertson. "The IMF is clearly looking to persuade the country to adopt policies that will allow Zimbabwe to pay its arrears - it has got to recover the ability to earn foreign currency. The IMF cannot lend to any country that shows the lack of ability to repay the money," Robertson pointed out. "The policies that have got us into the difficulties we now face; policies that have destroyed our ability to earn foreign currency - such as the [fast-track] land redistribution programme that wiped out the tobacco and beef export industries - are the things the IMF want to see us fix before they lend us any more money," he explained. After a staff team visited Zimbabwe in June, the IMF noted that "the magnitude of the economic problems confronting Zimbabwe calls for a comprehensive policy package that should include decisive action to lower the fiscal deficit, a tightening of monetary policy, and steps to establish a unified, market-determined exchange rate. The package should also include structural reforms, such as the removal of administrative controls, to ease shortages and restore private-sector confidence". Although the Fund stipulated that "a rebuilding of relations with the international community" was a critical part of the effort to reverse the economic decline, Robertson noted that the government appeared to be moving towards a more "isolationist policy", which could see its international relations deteriorate.