IMF to resume lending to Zimbabwe once it clears arrears with other multilateral creditors
Zimbabwe will start receiving funds from the International Monetary Funds (IMF) once it has cleared debts with other multilateral creditors such as the World Bank and the African Development Bank.
For months now, Zimbabwe and the IMF’s ties have evolved in a positive way, but there is need for the country to clear debts to other international financiers.
“We have normalized our relationship in terms of their arrears to the IMF, but they still have a significant debt overhang problem with other international financial institutions and other official creditors,” an official with the IMF, William Murray said.
“So it’s an issue that has to be addressed. There has to be an arrears clearance process and a clear strategy for clearing those arrears with other creditors and that also has to be factored in to their ability, their sustainability over time,” he added.
Zimbabwe owes the World Bank $1.15 billion, $601 million to the African Development Bank and over $3 billion to the Paris Club, among other creditors, Xinhua reports.
The IMF halted financial aid to Zimbabwe in 2001 after the country started defaulting. In 2016 the country cleared its $108 million.
According to Murray, Zimbabwe’s economy faces severe challenges including an unsustainable fiscal deficit which has led to severe liquidity shortages, created inflationary pressures, and threatened the viability of the financial sector and Zimbabwe’s exchange rate regime, the report said.
The Zimbabwean economy has suffered years of international isolation after the West imposed sanctions on the country at the turn of the millennium.
During his inauguration last year, the country’s new President Emmerson Mnangagwa promised to revive the economy, deal with corruption and provide employment.
Last month, President Mnangagwa became the first President from Zimbabwe to attend the World Economic Forum in Davos, Switzerland where he met several global business leaders including IMF managing director Christine Lagarde.
