World Economy
0

IMF Refuses More Loans to Zimbabwe

IMF Refuses More Loans to ZimbabweIMF Refuses More Loans to Zimbabwe

The International Monetary Fund (IMF) has said it will not lend more money to Zimbabwe, because the country is in arrears on repaying previous loans.

The IMF’s specialist Africa team is in Harare finalizing a program to help the government revive its stricken economy, with full details to be released next week.

IMF Assistant Director for Africa, Domenico Fanizza, told the BBC new loans were out of the question.

“We cannot in the current situation, because Zimbabwe runs arrears with the Fund and also other institutions like the World Bank and African Development Bank,” he said.

Fanizza also expressed concern about the government spending more than three quarters of tax revenues to pay the salaries of more than 250,000 workers employed by the state.

“The country, to grow, needs investment. This does not happen. There is no money, there is not enough support and all the money that is generated through tax collection goes into paying the wages,” he said.

 Embarrassing

Zimbabwe’s Finance Minister, Patrick Chinamasa, has admitted dealing with the issue with difficulty. “I am embarrassed that our wage bill is some 76% of whatever revenue we receive. It’s not good, it’s not sustainable,” he said.

“We have to create the necessary political climate, build consensus in order to tackle the issues. I can assure you that we are working on this issue,” Chinamasa said.

President Robert Mugabe raised salaries for government workers by 14% early this year, keeping promises made in the run-up to last year’s election. It is feared any move to reverse that would provoke unrest among well paid civil servants.

On Thursday, addressing the United Nations in New York, President Mugabe criticized the EU and US. “Because Zimbabwe has thus been pre-occupied with the empowerment of its people economically, she has become a victim of the evil machinations of Western countries, namely the United States of America and the European Union, who continue to apply unilateral and illegal sanctions as a foreign policy tool to achieve short-term political objectives, particularly regime change,” he said.

In a reference to Washington and Brussels hoping for a change of government in Harare he said: “Regime change is a diabolical, illegal policy of interference in the domestic affairs of my country and no good can come from undermining our economy, or depriving our citizens of the necessities of life.”

 $9b Debt

The country is still recovering from the collapse of its economy. Hyperinflation made the Zimbabwean dollar virtually worthless and led the nation to adopt the US dollar as its unofficial currency.

Zimbabwe remains frozen out of the international lending markets because it has fallen behind with repayments to institutions like the IMF.

Since last year the Fund has been guiding the government through a program aimed at helping it either clear or push back repayments of about $9 billion in external debts, which would give it access to much-needed international credit.

Financialtribune.com