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IMF Team Pursues Talks With Harare On Economy, FX, Debt

A six-member International Monetary Fund mission currently in Harare to consult and assess the state of the Zimbabwean economy continued its work on Tuesday, sources said, focusing among other issues on management of the falling local dollar.

The Zimbabwe dollar is officially pegged at Z$250 to the U.S. dollar, but on the black market trades 10 times weaker at Z$2,500 to the greenback. Talks also focused on Harare's substantial external debt, hard currency reserves and fiscal management.

Such Article IV visits are carried out to monitor the compliance of member nations with commitments they have made to economic policies that the IMF has recommended to foster growth while holding down inflation - hyperinflation in Zimbabwe's case.

The IMF team will report to the Fund's executive board, which will look at Zimbabwe's member status at a February meeting and could move toward expelling Harare.

Zimbabwe has debt arrears of some US$127 million to the IMF and economists say that it has not adopted the recommendations of the IMF on how to pull the economy out of a six-year recession or lower inflation from over 1,000%.

Reserve Bank Governor Gideon Gono has expressed optimism that the IMF will not move to expell Harare, which would require a wider vote by members.

Economist John Robertson of Harare told reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe that Harare’s economic meltdown is worsening.

Chief Economist Prosper Chitambara of the Labor and Economic Development Reseach Institute said Harare's recent prosecution of business executives over price control violations is counter-productive and will not help its cause with the IMF, which has been calling on the government for years to abandon price controls.

More reports from VOA's Studio 7 for Zimbabwe...