New IMF talks

The International Monetary Fund’s (IMF) deputy director for Africa, Anupam Basu, arrived in the Zimbabwe capital, Harare, this week for talks with finance ministry officials following a media storm over allegations that the government had misled the IMF about the cost of its military intervention in the Democratic Republic of Congo (DRC). A spokesman for the IMF told IRIN that no further details of the visit would be available until the talks were completed. Meanwhile, the Zimbabwean weekly newspaper, ‘The Financial Gazette’, reported this week that any further balance of payment support would depend on the outcome of the talks. In July the IMF approved a multi-million dollar aid programme for Zimbabwe. According to the newspaper, the talks would focus on the Zimbabwe’s economic reforms and its failure to achieve economic targets that had been agreed upon on August. At the meeting in August, the government agreed to pursue tighter monetary and fiscal policies in an effort to bring down inflation. Last month inflation in Zimbabwe had reached a record high of 69.7 percent. At the time the Zimbabwean government also said that it would strengthen its revenue collection system and speed up the privatisation process. The government also said that it would bring the budget deficit down to about 5 percent of its gross domestic product. The article added said recent media reports that the government had misled the IMF about its spending in DRC would also be discussed. A report by the ‘Financial Times’ in London earlier this month, quoted an internal memo from the minister of finance which claimed that Zimbabwe had spent US $166 million from January to June rather than the US $3 million a month it had told the IMF. Zimbabwe Finance Minister Herbert Murerwa said at the time that the memo referred to the potential, rather than the actual costs of the intervention. Last week the World Bank said that it had indefinitely postponed talks on a new US $140 million structural reform programme until the government got its programme with the IMF back on track. In September The Netherlands said that it had cancelled a US $15 million aid programme to Zimbabwe citing concerns over governance and macroeconomic performance.