The International Monetary Fund (IMF) is considering resuming financial support to Zimbabwe as early as 2016 if foreign creditors accept Harare’s plans to clear arrears to international financial institutions and implement economic reforms to boost growth.
Reuters reports that the southern African country’s government owes foreign creditors about $7 billion, but it has to table acceptable plans to first clear $1.8 billion arrears to the IMF, World Bank and African Development Bank before financiers can resume lending to the country.
Christian Beddies, the IMF representative in Zimbabwe, told Reuters that authorities will present, and seek support for, their strategy for arrears clearance on the sidelines of the annual meeting of the World Bank and IMF in Lima, Peru, next month, which could pave way for new funding.
Beddies said Zimbabwe had developed a “sensible strategy” to clear the arrears with international financial institutions. The Lima meeting will be an important step towards normalising relations with creditors, he added.
Zimbabwe has declined to disclose details of their plans.
Zimbabwe last received funding from the IMF in 1999. The IMF in February 2010 restored Zimbabwe’s voting rights after a seven-year suspension.
‘If creditors support the plans and Zimbabwe successfully completes a monitoring programme that ends in December, Harare could then start talks about a three-year economic reform programme supported by the IMF, Beddies said.
That programme requires approval from the IMF Executive Board, he said.
“The exact timing of restarting financial support is a difficult question as it depends on quite a few things, including support at the Lima meeting,” Beddies said. “That said, and if all goes well, we could be looking at some time in 2016.”
Beddies said Zimbabwe, which has halved its growth this year to 1.5 percent, had made good progress in implementing reforms under the monitoring programme.
Without any balance of payment support and staved of foreign credit, Zimbabwe is running a cash budget, leaving little to finance infrastructure projects.
A return to the international financial markets would enable the country to borrow to rebuild infrastructure wrecked by a catastrophic recession between 1999-2008 and help local industry struggling to stay afloat.
The African Development Bank last week agreed to write off Zimbabwe’s arrears to the bank, subject to agreement by the AfDB board of directors.