Business / Economy
'No financial assistance until Zimbabwe clears arrears,' says IMF
04 Mar 2015 at 16:06hrs | Views
Zimbabwe cannot get a debt rescheduling which will enable it to start receiving financial assistance from international financial institutions until it has cleared arrears owed to the International Monetary Fund and the World Bank, an official has said.
IMF head of staff mission to Zimbabwe Domenico Fanizza told the Parliamentary Portfolio Committee on Finance and Economic Development that the fund is working with other financial institutions to put together a strategy on how to clear the country's arrears.
The staff mission is in the country to complete the first review of the 15 month Successor Staff Monitored Programme which runs from October 2014 to December 2015.
"We are working with other financial institutions in order to identify a strategy together. It is not a simple process, it requires a lot of consensus. The policies we have agreed upon under the SMP should be implemented properly. It's a process and we hope we will be successful.
"The deal is (that) once the arrears are cleared, Zimbabwe will embark- with the collaboration of the fund and possibly of the World Bank, in a broader reaching economic programme that would try to address the reason behind the arrears," he said.
"We will consider financial support only when there is agreement on how to solve the arrears but otherwise we cannot do it. It is not the timelines because there are strict rules that the fund cannot engaged with the country unless other international institutions, which is the World Bank, is satisfied."
Zimbabwe has had no access to international lines of credit due to its close to $10 million debt to international financial institutions with arrears of $124 million to the IMF and $1 billion to the World Bank. The country concluded the first Staff Monitored Programme with the IMF last year and committed to the quantitative targets under the successor programme. The objectives of the second IMF SMP include the consolidation of the country's fiscal position, improving the external position and the implementation of structural reforms to enhance the business climate.
Fanizza said the staff mission will look at whether policies implemented in the last four months are consistent with agreed reforms under the programme and discuss forward looking policies in light of recent developments.
"After this mission we will go back to Washington and submit a report to our management and recommend approval of the review and possibly complete the review. Completing the review is an essential step in building the momentum in the process of reengaging with the international financial community," he said.
He said the SMP opens a way towards the steps needed in reengagement which include agreeing on a plan for clearing the outstanding arrears with World Bank, AFDB and IMF.
"Once that is done we can think about financial reengagement of the IMF in the country. And also Zimbabwe can think of requesting rescheduling of the outstanding bilateral debt with donors through the Paris Club which is the standard process. But that would happen only after the programme is successfully completed and once the arrears are cleared," he added.
He said the deep seated problems of the Zimbabwean economy cannot be addressed without the financial support of the international community and that the IMF will work towards restoring assistance to the country.
IMF head of staff mission to Zimbabwe Domenico Fanizza told the Parliamentary Portfolio Committee on Finance and Economic Development that the fund is working with other financial institutions to put together a strategy on how to clear the country's arrears.
The staff mission is in the country to complete the first review of the 15 month Successor Staff Monitored Programme which runs from October 2014 to December 2015.
"We are working with other financial institutions in order to identify a strategy together. It is not a simple process, it requires a lot of consensus. The policies we have agreed upon under the SMP should be implemented properly. It's a process and we hope we will be successful.
"The deal is (that) once the arrears are cleared, Zimbabwe will embark- with the collaboration of the fund and possibly of the World Bank, in a broader reaching economic programme that would try to address the reason behind the arrears," he said.
"We will consider financial support only when there is agreement on how to solve the arrears but otherwise we cannot do it. It is not the timelines because there are strict rules that the fund cannot engaged with the country unless other international institutions, which is the World Bank, is satisfied."
Fanizza said the staff mission will look at whether policies implemented in the last four months are consistent with agreed reforms under the programme and discuss forward looking policies in light of recent developments.
"After this mission we will go back to Washington and submit a report to our management and recommend approval of the review and possibly complete the review. Completing the review is an essential step in building the momentum in the process of reengaging with the international financial community," he said.
He said the SMP opens a way towards the steps needed in reengagement which include agreeing on a plan for clearing the outstanding arrears with World Bank, AFDB and IMF.
"Once that is done we can think about financial reengagement of the IMF in the country. And also Zimbabwe can think of requesting rescheduling of the outstanding bilateral debt with donors through the Paris Club which is the standard process. But that would happen only after the programme is successfully completed and once the arrears are cleared," he added.
He said the deep seated problems of the Zimbabwean economy cannot be addressed without the financial support of the international community and that the IMF will work towards restoring assistance to the country.
Source - BH24
