IMF presents report to government as tough decision looms

By Tererai Karimakwenda
01 February 2006

The International Monetary Fund – the IMF - has been in Zimbabwe for a week and is due to hand over a report to government officials on Wednesday. State-controlled radio admitted the IMF report could prove crucial in terms of the country retaining its membership. Experts say inflation soared to about 900% just before the IMF team arrived and massive power cuts have plagued the entire country during the team’s visit. The signs of economic collapse are visible and analysts say it will get worse. But will the IMF keep providing Mugabe with more opportunities while the deterioration continues, or decide to put an end to Zimbabwe’s relationship with the Bretton Woods financial institution? What the IMF decides will reveal whether people or business lie at the core of its principles.

Andrea Bohnstead, an economics analyst for sub-Saharan Africa Global Insight, believes the IMF is caught between a rock and a hard place. She believes it is in no-one’s interest to end Zimbabwe’s membership, but it would also be detrimental to continue helping a country that refuses to make the fundamental policy reforms the institute has recommended. She said: “It is like stealing money from a starving beggar.”
But a March deadline is looming which could see the country expelled from the IMF. Zimbabwe now owes nearly US$137-million after paying US$15-million just before the team arrived. Reports say US$16-million is due in the next two months. The importance of making IMF payments has been questioned by critics, who believe the money should be spent on more crucial necessities like fuel and food. But others believe expulsion could create even worse circumstances as businesses and donors withdraw, fearing instability and chaos. The country has struggled with the payments, and Bohnstead said the source of funds used to meet a large installment some months ago is in question. Some exporters’ accounts were allegedly raided, illegally.
Bohnstead said the IMF was hoping to nudge the Zimbabwe government into making the necessary reforms. But she believes this will be difficult as the solution involves resolving the political crisis created by the Mugabe regime. The IMF report will be made public and both the IMF and Mugabe will soon have to make hard decisions. Hopefully the suffering people of Zimbabwe will feature somewhere in those decisions.