World Bank suspends loan payments

The World Bank this week suspended loan payments to Zimbabwe, adding further to the country’s economic woes. “Zimbabwe is 60 days over due with its loan repayments. This is completely routine and has nothing to do with the political situation in the country. Once Zimbabwe had paid its arrears, the suspension would be lifted,” Richard Uku, communications officer at the World Bank headquarters in Washington told IRIN on Wednesday. “The same procedure would have been followed for nay other country that had fallen into arrears,” Uku added. The decision by the World Bank comes just one day after President Robert Mugabe announced that parliamentary elections would be held on the weekend of the 24 and 25 June. Economists said on Wednesday that unless Zimbabwe caught up with its loan repayments, vital infrastructure developments in the country would be jeopardised. The gross domestic product is expected to shrink by up to 5 percent in this year, inflation is currently running close to 60 percent and interest rates are at 70 percent. Meanwhile, half the eligible workforce is estimated to be unemployed with over 60 percent of the country’s 12.5 million population are living below the poverty line. Tobacco is the country’s main source of foreign exchange and Zimbabwe growers produced a record crop this year of 220 million kg of flue-cured tobacco. Zimbabwe is the world’s third largest tobacco producer. But the Zimbabwean Tobacco Association (ZTA) said recently that the disruption caused by farm occupations had cost the county millions of dollars in lost revenues. Eric Bloch, a leading Zimbabwean economist told IRIN said the economic situation was likely to grow worse over the next three months until after the parliamentary elections when a new government, whether or not Mugabe’s ruling ZANU-PF maintains its 20-year grip on power, will follow a more pragmatic programme. “Instead of talking about recovery, a new government will have to concentrate on implementing an economic rescue package. That is what I hear lately from politicians of all shades, both in ZANU-PF and the opposition Movement for Democratic Change (MDC),” he said told IRIN in a recent interview.