- The International Monetary Fund (IMF) has today announced the decision to lift the suspension of Zimbabwe from its technical assistance.
However, the Executive Board of the IMF said the assistance will only be to targeted areas.
"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 banking governance and accounting," the fund announced in a statement.
According to the IMF, Zimbabwe has been in continuous arrears to the Fund since February 2001, and is the only case of protracted arrears to the Poverty Reduction and Growth Facility-Exogenous Shock Facility (PRGF-ESF) Trust, which is currently said to amount to about US$133 million.
The Executive Board said it would review its decision at the time of the next review of Zimbabwe’s overdue financial obligations to the PRGF-ESF Trust, and at subsequent six-monthly reviews as long as Zimbabwe has overdue financial obligations to the Trust.
In taking this decision, the board said it took into account a significant improvement in Zimbabwe’s cooperation on economic policies to address its arrears problems and severe capacity constraints in the IMF’s core areas of expertise that represent a major risk to the implementation of the government’s macroeconomic stabilisation programme.
The IMF said economic and social indicators in Zimbabwe worsened significantly in 2008, with the Real Gross Domestic Product (GDP) estimated to have fallen by about 14 percent in 2008, over and above a 40 percent cumulative decline during the period of 2000–07, due to economic disruptions caused by hyperinflation and a further significant deterioration in the business climate.
The IMF also noted that poverty and unemployment have risen to catastrophic levels, with 70 percent of the population in need of food assistance and a cholera epidemic that claimed more than 4,000 lives.
The IMF has however said Zimbabwe's short-term macroeconomic outlook is uncertain. "The government’s short-term emergency recovery programme and the revised 2009 budget contain a number of important macroeconomic and structural policy commitments which, if fully implemented and supported by donor assistance, could lay the foundation for a private sector-led economic recovery in a low-inflation environment. However, there are significant downside risks to the economic recovery due to potential policy reversals," the IMF pointed out.
In forming the decision on Zimbabwe, amongst others, the IMF Board of Directors underscored that the revival of the economy depends critically on quickly attracting private domestic and foreign investors and improving competitiveness. "It is essential that the government ensures the protection of property rights, maintains the rule of law, guards against protectionism, and pursues prudent wage and income policies," said the board, further underscoring the importance of establishing fiscal discipline while ensuring the delivery of essential public services by the new unity government of Zimbabwe.
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