Zim gets IMF voting rights, but no new loans

By Alex Bell
22 February 2010

The global financial lending body, the International Monetary Fund (IMF), has agreed to restore Zimbabwe’s voting rights, seven years after the country was suspended over its multi million dollar debt.

But the Fund said the country was still ineligible for loans until it had paid off its US$1.3 billion debt. In the meantime, Zimbabwe will once again be allowed to take part in IMF decision-making and voting, in a move which observers have said recognises the country’s efforts to repair the shattered economy.

“The board decided today to restore Zimbabwe’s voting and related rights, and its eligibility to use resources from the IMF’s General Resources Account, following a request from Zimbabwe’s Finance Minister Tendai Biti,” the IMF said in a statement last Friday.

But the IMF said Zimbabwe would not have access to IMF funds until it had fully settled its arrears to official creditors including the IMF, World Bank and African Development bank.

“Access to IMF lending resources is also subject to IMF policies on the use of such resources, including a track record of sound policies and the resolution of arrears to official creditors, which would require donor support,” the Fund added.

The move is being described as purely symbolic and a show of good faith that recognises efforts to rebuild the economy. But analysts say Zimbabwe has not done enough to prove that it can reliably pay back new loans, as there is no proof that Zimbabwe is a safe investment zone. A new controversial indigenisation bill, which would see all foreign businesses forced to cede more than 50% of their shares to indigenous Zimbabweans, has effectively scuppered efforts to encourage international investment. The bill, steadfastly supported by Robert Mugabe and his party, has also left local business owners reeling.

Some observers have argued that this law is just an extension of the land ‘reform’ programme, a political weapon Mugabe has used over the years to secure voter support. It is being widely speculated that the government approved list of ‘suitable candidates’ for indigenous shareholding under the law will be a list of cronies and supporters loyal to the Mugabe regime. Such a list would likely mirror the list of mainly well-connected beneficiaries of the land grab campaign, which has seen ZANU PF loyalists secure multiple pieces of farm land.

The IMF originally suspended Zimbabwe’s voting rights in 2003 over its multi million dollar arrears, as well as ‘policy differences’ with the previous ZANU PF administration. These differences were mainly related to the chaotic land grab campaign that destroyed the financial powerhouse of agriculture in Zimbabwe, a sector that has still not recovered. The seizure of land in the name of ‘land reform’ meanwhile has continued, further dissuading potential investors from investing in Zimbabwe.