The International Monetary Fund announced Wednesday that it has lifted the suspension of Zimbabwe insofar as technical assistance is concerned, clearing the way for IMF experts to help the country in areas such as tax policy and central bank governance.
The decision to resume technical assistance was reached on Monday by the IMF Executive Board, which reviewed the findings of a recent IMF mission to the country.
"Effective from May 4, 2009, IMF technical assistance can be provided to Zimbabwe in the areas of (i) tax policy and administration; (ii) payments systems; (iii) lender-of-last-resort operations and banking supervision; and (iv) central bank governance and accounting," the statement said, identifying the "targeted areas" for such assistance.
An IMF statement said factors influencing the decision included “significant improvement” in Zimbabwe's cooperation on economic policies aimed at resolving its outstanding arrears to the Fund, as well as “severe capacity constraints...that represent a major risk to the implementation of the government's macroeconomic stabilization program."
But it is understood that the IMF will not extend financial aid to Zimbabwe until the country has cleared its arrears on debt payments to all international financial institutions, including the World Bank and the African Development Bank, which total more than US$1.2 billion.
In order to clear those arrears, Zimbabwe will have to secure loans from international donors which means convincing them it is committed to a broad range of reforms.
The IMF described Zimbabwe's short-term economic outlook as “uncertain.”
But it said the short-term recovery program and 2009 budget set down by the national unity government in place since February contain important macro-economic and structural policy commitments that could lay the foundation for a recovery led by the private sector.
However, it cited “significant downside risks” if those policies should be reversed.