As the International Monetary Fund’s consultation mission in Zimbabwe prepared to wind down its business Wednesday, government officials revealed the country had no money to pay off its arrears to international lending institutions.
Sources said state officials told the IMF team in various meetings that Harare was broke as revenues declined by almost 35 percent in the first quarter of 2011 due to diminished production in various sectors and lack of significant foreign direct investment.
The sources said Treasury and the Reserve Bank of Zimbabwe made it clear that the country cannot meet its own financial needs as revenue collection fell from US$350 to US$150 million a month.
The government has even suspended some capital projects due to lack of funds. As a result, no money has been set aside to pay off part of the country’s US$7 billion external debt.
Economist Eric Bloch said failure by the government to pay part of its international financial commitments is disastrous for a nation failing to attract foreign investors.
“Zimbabwe needs to modify its economic policies radically, turn empowerment laws into constructive ones, streamline government spending by reducing the size of the civil service and negotiate with the international community for debt redemption through the Highly Indebted Poor Countries initiative,” said Bloch.