The International Finance Corporation (IFC) is preparing to invest in Zimbabwe for the first time in over 15 years, in a move Zimbabwe says is linked to re-engagement talks with global lenders that began over 15 months ago. The IFC is a World Bank affiliated organization which lends to private sector in developing countries.
The news comes as the International Monetary Fund (IMF) confirmed that Zimbabwe has met the third and final staff monitoring programme moving it closer to accessing soft loans from the global lenders for the first time since 1999. Zimbabwe, whose borrowing rights were frozen after it defaulted on arrears, has agreed to undertake an IMF monitored reform programme with a view to having those rights restored.
The IMF says Zimbabwe has met agreed reform benchmarks in the last stage of a 15 month long monitoring programme. The IMF and other global lenders froze loans to Zimbabwe in 1999 when the country defaulted on its arrears repayment.
Zimbabwe has assured the creditors that it will clear the 1.8 billion arrears by May this year. About this clearing of arrears, Demenico Fanizza who is the IMF Head of Mission says, “That will be a key step towards normalizing relations together, and with preparations of an ambitious economic programme, could prepare the ground for seeking financial support.”
It is unknown when the credit lines will be resumed, but in the past the IMF has said it could be in 2016. The IMF and World Bank want more assurances that the Zimbabwe’s economy is on a solid growth path that will allow the country to service old and future debt and cement support among international partners.
Zimbabwe’s mining and agricultural dependent economy is still weighed down by other uncertainties, including its land reform programmes and indigenization laws. Farmers’ groups say 5000 whites, who lost their farms, are owed up to $10 billion in compensation. Zimbabwe says it will find ways to resolve challenges caused by taking over farms that had been protected by bi-lateral investment protection agreements.
Zimbabwe’s Finance Minister Patrick Chinamasa says, “In the heat of our revolution, that policy that we had put in place that bigger farms should not be touched was breached. If there are any farms that were settled, we will look at it on a case by case basis and look at an innovative way to settle it with the affected.”
The IMF says Zimbabwe needs to come up with an ambitious economic transformation programme to revive the economy.