Zimbabwe clears IMF arrears but still not out of the woods

Zimbabwe clears IMF arrears but still not out of the woods

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ZIMBABWE has cleared its 15-year-old financial arrears with the IMF, a first step towards a new IMF loan programme for the drought-stricken, cash-starved country.

According an IMF statement on October 20, Zimbabwe settled obligations of about $107.9 million by transferring part of its cash holdings at the IMF to the fund’s Poverty Reduction and Growth Trust. ‘Zimbabwe is now current on all its financial obligations to the IMF,’ IMF spokesman Gerry Rice said. Zimbabwe had been in continuous arrears since 2001, he added.

However, a new IMF loan programme for Zimbabwe cannot be considered until the country clears more than $1bn in World Bank arrears and another $600bn-plus owed to the African Development Bank (AfDB).

The next step towards an IMF loan would be consideration by the fund’s executive board of a formal proposal to lift remaining remedial measures imposed on Zimbabwe because of the arrears.

The lifting of the remedial measures does not automatically provide Zimbabwe with access to IMF financing. Access to IMF resources would first require the establishment of a credible plan to clear arrears with other IFIs [international financial institutions]and with bilateral creditors, in line with applicable fund policies,’ the IMF said. ‘It would also require implementing a strong reform agenda to restore economic stability and foster sustained and inclusive growth.’

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