WASHINGTON (Reuters) – The International Monetary Fund on Tuesday relaxed restrictions on technical assistance to Zimbabwe, opening the way for an IMF staff-monitored economic program.
Prime Minister Tsvangirai and President Mugabe
The move marks a major step toward normalizing relations with the southern African country.
“The executive board has decided to resume IMF technical assistance in certain new areas to support Zimbabwe’s formulation and implementation of a comprehensive adjustment and structural reform program that can be monitored by the staff,” the IMF said in a statement.
While Zimbabwe is still not able to tap IMF funding, easing the restrictions moves it in that direction. The IMF would want to see a track record of sound policies by the unity government of President Robert Mugabe and Prime Minister Morgan Tsvangirai before it agrees to a lending program.
The IMF suspended Zimbabwe’s voting rights in 2003 over policy differences with the Mugabe government and payment arrears to the global lender. The voting rights were restored in 2010, allowing Zimbabwe to again participate in IMF decision-making.
In its statement, the IMF said its board of member countries agreed there had been “significant improvement in Zimbabwe’s cooperation on economic policies and renewed commitment to address its arrears problems.”
IMF technical advice to Zimbabwe will now be extended to cover tax policy and administration, public financial management and expenditure policy, financial sector and central bank reform measures, monetary and exchange policies, and economic statistics.
The country faces a huge debt burden. Its total external debt is estimated at $10.7 billion, or 113.5 percent of GDP, at the end of 2011. More than half of it is in arrears.
Zimbabwe is still emerging from a decade of economic decline and hyperinflation. The economy has slowly been on the mend since the formation of a unity government in 2009, and the government recently projected growth of 8.9 percent in 2013.
However, there are concerns over upcoming elections due next year given Zimbabwe’s recent history of violent and disputed elections. reuters