IMF warns Zimbabwe

IMF warns Zimbabwe
Published: 09 July 2017 (205 Views)
The International Monetary Fund has warned Zimbabwe not to take on additional debt under non-concessionary terms, as the country pursues its arrears clearance plan with multilateral lenders.

Last year the southern African nation, which has been in arrears since 2001, used its allocation of Special Drawing Rights (SDRs) to settle a $108 million debt owed to the IMF's Poverty Reduction and Growth Trust (PRGT) but it still owes the World Bank $1,7 billion in arrears.  

The country is yet to reach an agreement with the World Bank and other multilateral institutions on the settlement of arrears, and undertake reforms that would facilitate resolution of arrears with bilateral creditors, delaying the re-engagement process.

"The authorities view market resources, an option with costlier financial terms, as the only alternative to clear World Bank arrears in the absence of official support. They are willing to collateralise gold proceeds to settle these obligations, and pave the way for regularisation of arrears with other creditors," the IMF said in a report released late Friday after a meeting of its board.

The IMF, however, raised concerns over the sustainability of relying on market resources to repay the World Bank obligations.

"Collateralising gold proceeds could complicate future debt relief. The key question is the timing and quantity of new financing that the arrears clearance could unlock," the IMF said.

The clearance of arrears is seen as a key step for the country to be rehabilitated into the international community before it can access any form of new financing from lenders.  

Zimbabwe's foreign debt stands at more than $7 billion, about 50% of its GDP.

President Robert Mugabe's government is borrowing heavily on the local market, with domestic debt now at $4 billion after running a budget deficit of $1,4 billion last year.  

The IMF also wants the government to scale back on unbudgeted expenditure in agriculture under its "command" scheme under which it borrowed $192 million from a local fuel dealer, Sakunda. Harare says it has raised $500 million for the programme in the 2017/8 season.

IMF "encouraged the authorities to engage only in well-targeted, cost effective, and properly budgeted support to the agricultural and other productive sectors," said the IMF.

"Budgetary operations are crowding out the private sector, and the expenditure profile tilted towards employment costs and unsustainable agricultural support is inhibiting investments in other priority sectors, particularly infrastructure and social outlays."

An IMF team  led by Ana LucĂ­a Coronel, visited Zimbabwe for Article IV consultations from May 2 to 13.

In the report, the IMF projects Zimbabwe's inflation to increase to 7% by year-end. In May Zimbabwe's inflation was at 0,75% up from -0,65 in January.

- The Source

Tags: IMF, Zimbabwe, Debt,
 0

You May Like These Videos

Comments

There are no comments.

Latest stories

Mugabe's legacy: A case of inherited oppression

by Patson Dzamara | 22 July 2017 | 61 Views

Family of 4 escape death by a whisker

by Staff reporter | 22 July 2017 | 92 Views

Lupane underdevelopment irks Zanu-PF youths

by Staff reporter | 22 July 2017 | 59 Views

WATCH: A message from the diaspora

by Staff Reporter | 22 July 2017 | 54 Views

Lost crops: Food for thought for Zimbabwe

by Praxedis Dube1, Rico Ihle1, Wim Heijman1 and Paul Struik2 | 22 July 2017 | 60 Views

Grace Mugabe turns 52 tomorrow

by Staff reporter | 22 July 2017 | 56 Views

Mliswa must Go! - Norton residents in demo

by Agencies | 22 July 2017 | 64 Views

'Zanu-PF fears Tsvangirai,' says MDC-T official

by Stephen Jakes | 22 July 2017 | 115 Views

Grace Mugabe declares Zanu-PF win in Matabeleland North

by Staff Reporter | 22 July 2017 | 96 Views

Tsvangirai set to meet party structures in Harare

by Staff Reporter | 22 July 2017 | 69 Views

Of artists fostering & protecting tyrants

by Tshaka Mgazo Ndlovu | 22 July 2017 | 66 Views

Mother's frantic search for missing son

by Philimon Bhogana Dube | 22 July 2017 | 73 Views

Messenger of court storms funeral

by Staff reporter | 22 July 2017 | 74 Views

Mugabe wades into the Marange chieftainship wrangle

by Staff reporter | 22 July 2017 | 62 Views

Grace Mugabe mine wrangle turns ugly

by Staff reporter | 22 July 2017 | 70 Views

Mugabe challenges Zanu-PF chefs

by Staff reporter | 22 July 2017 | 55 Views

Villagers to pay $10 for Heroes Day commemorations

by Staff reporter | 22 July 2017 | 56 Views

'She attacked me with a pot'

by Staff reporter | 22 July 2017 | 59 Views

'Mat North a Zanu-PF stronghold,' claims Grace Mugabe

by Staff reporter | 22 July 2017 | 53 Views

12 of 14-gang serial armed robbers convicted

by Staff reporter | 22 July 2017 | 62 Views

POSA to stay

by Staff reporter | 22 July 2017 | 63 Views

Bhasikiti challenges Mutasa to come clean on Mugabe meeting

by Staff reporter | 22 July 2017 | 65 Views

Mugabe lashes out at individuals who abuse cyber space

by Staff reporter | 22 July 2017 | 53 Views

Police approve Mthwakazi rallies

by Staff reporter | 22 July 2017 | 37 Views

Couple's only 2 kids drown in dam

by Staff reporter | 22 July 2017 | 49 Views

Jomo Sono invites Bosso to anti-Xenophobia Cup tourney

by Staff reporter | 22 July 2017 | 71 Views

ZBCtv to broadcast live Bulawayo concert

by Staff reporter | 22 July 2017 | 56 Views

Bosso founding player dies

by Staff reporter | 22 July 2017 | 86 Views

Tsvangirai warns against imposition of candidates

by Staff reporter | 22 July 2017 | 38 Views

Chombo's arrest bid flops

by Staff reporter | 22 July 2017 | 28 Views

Mugabe admits the existence of Zanu-PF militia groups

by Staff reporter | 22 July 2017 | 60 Views

WATCH: 'Dirty dancing' in Mashonaland Central

by Simbarashe Sithole | 22 July 2017 | 108 Views