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IMF Sees 'Nascent" Recovery in Zimbabwe, But Remains Firm on Arrears

  • Chris Gande

The International Monetary Fund says economic policy reforms in Zimbabwe have produced a "nascent" economic recovery, but continues to insist the country pay down its debt arrears of more than US$1 billion to multilateral creditors before it will extend new loans.

"As a result of improvements in macroeconomic policies, a nascent economic recovery appears to be underway," the IMF said in a statement issued Thursday.

"A more liberal economic environment, price stability, a deepening in financial intermediation, and increased access to foreign credit lines underpinned a pickup in economic activity," the institution said in concluding a recent Article IV mission to Harare.

"The public finances benefited from the recovery in economic activity and consumption. The government matched expenditure to revenue during January-May 2009; and significant increases in budget revenue in recent months have made it possible to start implementing nonwage expenditures in critically important social areas," the Fund said.

"To sustain positive economic trends and improve living standards, reform and stabilization efforts need to be stepped up. In particular, the authorities would need to create sufficient fiscal space for nonwage expenditures in social spheres and critical infrastructure, establish workable coordination mechanisms for attracting direct donor financing of priority social programs, improve Reserve Bank of Zimbabwe governance, further promote financial intermediation, and strengthen the business climate," the statement said.

The IMF said it would continue to provide technical assistance, but that Zimbabwe would have to line up financial support from bilateral donors to clear its arrears to the IMF, the World Bank and the African Development Bank, which total more than US$1.2 billion.

Harare economist Luxon Zembe told reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe that despite such progress, the recovery is in its early stages and needs sustenance.

Independent analyst Rejoice Ngwenya told VOA reporter Chris Gande that the Bretton Woods institution is sending an encouraging signal to other investors.

Elsewhere, the Commonwealth of Nations has called a meeting in Johannesburg on Tuesday to organize humanitarian assistance for Zimbabwe.

The chairman of the Commonwealth Committee on Zimbabwe, Carl Wright, said the purpose of the gathering is to call on professional and other networks in Commonwealth to support existing aid and promote Zimbabwe's longer-term reconstruction.

Zimbabwe was suspended from the Commonwealth in 2002 and quit in December 2003.

Most of the Commonwealth's 53 members were formerly part of the British Empire.

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