By re-establishing Zimbabwe’s voting rights — which would allow the country to take part in IMF decision-making again — the international community would be sending a strong signal of support for policies of the new unity government led by President Robert Mugabe and opposition leader Prime Minister Morgan Tsvangirai.
The IMF suspended Zimbabwe’s voting rights in 2003 over policy differences with Mugabe’s government at the time and payment arrears to the IMF.
IMF spokesman David Hawley said reinstating Zimbabwe’s voting rights would however not give the government automatic access to IMF financing.
“Access to general resources would depend on Zimbabwe clearing its arrears to the (IMF’s) Poverty Reduction and Growth Trust,” Hawley added. The PRGT is the IMF’s low-cost lending arm for its poorer borrowers.
Zimbabwe’s arrears to the PRGT amount to about $140 million at the end of 2009. The government has tried to pay down its arrears through quarterly payments of around $100,000 since May 2009.
Zimbabwe is emerging from a decade of economic decline, which critics of Mugabe blame on his land reform policies and economic mismanagement that led to hyperinflation and a total collapse in the economy.
Since the creation of the unity government a year ago, Zimbabwe’s economy has slowly started to show signs of recovering, with gross domestic product growth at a better-than-expected 4.7 percent in 2009.
In an interview on February 3, Zimbabwe’s Finance Minister Tendai Biti told Reuters the United States, Britain and Germany — three of the IMF’s most influential members — indicated they would support restoration of voting rights.
Samuel Itam, who represents a constituency of African countries at the IMF board, including Zimbabwe, told Reuters he was “cautiously optimistic” about Zimbabwe’s request.
He said Zimbabwe should be given the needed support from the international community for progress so far in addressing its economic problems.
Meanwhile Zimbabwe’s monthly inflation for January increased slightly to 0.7 percent from the December rate of 0.5 percent, the government statistics agency said Thursday.
“The month on month inflation rate in January was 0.7 percent gaining 0.2 percentage points on the December rate of 0.5 percent,” the Central Statistics Office (CSO) announced Thursday in a statement.
The CSO said Consumer Price Index (CPI) for January was -4.8 percent up from the December rate of -7.7 percent.
Zimbabwe’s inflation used to gallop into multiples of billions before the formation of the unity government of President Robert Mugabe and Prime Minister Morgan Tsvangirai in February last year, thanks to the off-loading of the free falling local dollar.
Zimbabwe now transacts using stable currencies like the United States dollar and the South African rand.The unity government has projected a high econmic growth of double digits levels above 10 percent for the next three years, after reporting an economic growth 4.7 percent last year.
However, the projections for the next three years depend on the progress that will be made by the unity government in resolving sticking issues in the Global Political Agreement (GPA). Reuters/Radio VOP