IMF Restores Zimbabwe Voting Rights

| Monday February 22, 2010 00:00

 

The IMF said, however, that Zimbabwe was not eligible for financial aid until it had cleared its arrears to the Fund and had a plan to pay off arrears to the World Bank and African Development Bank.

The arrears to the three institutions total about $1.3 billion.

In an interview with Reuters, Zimbabwe Finance Minister Tendai Biti said key donors like the United States and Britain made strong statements of support for Zimbabwe during the IMF meeting but want to see more political and economic reforms.

'It's a major indicator that if we continue on the path of reform, on the path of stabilization, and policy consistencies, we can achieve full reintegration and full support,' he said.

The IMF suspended Zimbabwe's voting rights in 2003 over policy differences with the previous government of President Robert Mugabe.

Western donors withdrew crucial funding for the southern African country and blamed Mugabe's land reform policies and mismanagement for the collapse of the once prosperous economy.

Mugabe formed a unity government a year ago with former opposition leader Morgan Tsvangirai, who is now prime minister. The IMF has said there are signs the economy is starting to recover due to improved policies.

Biti said that without addressing Zimbabwe's debt burden of close to $6 billion, including to the Paris Club of creditor nations, the country would be unable to recover fully from more than a decade of economic decline.

In a country where 85 percent of the population lives below the poverty line and per-capita income is less than $400, Biti said it would be 'immoral to take any dollar of our meagre resources' to pay off our debt.

'It is self-evident that we have to come to an understanding with the creditors and partners on our debt,' he added.

But to win donor support for debt cancellation, Biti said Zimbabwe had to establish a track record of good economic and political decisions.

'(Donors) are preparing to support us but they are also rightfully raising certain issues that we have to deal with,' Biti added.

Among those, he said, was a clear signal about the political direction of the country including the credibility of the political coalition, and progress in building a democratic state through agreement on a new constitution and strengthening the rule of law.

On the economy, he said donors wanted 'clear signs that the economic stabilisation work we have done is not a flash in the pan and is an irreversible commitment.'

Biti said an IMF team would next visit Zimbabwe in early March.

Meanwhile the Zimbabwe's state power utility ZESA Holdings has extended electricity cuts after a complete loss of generation at the Hwange thermal plant, the company said in a statement on Saturday.

Most urban areas have for the past week experienced prolonged electricity cuts, sometimes lasting more than 24 hours.

ZESA said Hwange, with a design capacity to produce 750 MW of electricity, had been hit by a series of faults on the regional power grid, leaving the plant unable to produce any power.

'These forced outages caused complete loss of generation at Hwange and in the process resulting in major equipment damage,' the statement said.

'Hwange power station is making efforts to bring back those generation units they have repaired, one at a time, and hopes to achieve 350 MW production within a week.'

The country is relying on the 750 MW Kariba hydro plant, which is producing at full capacity, while imports, mainly from Mozambique are dwindling as regional demand for electricity rises.

Zambia and Democratic Republic of Congo also export to Zimbabwe, when they have low demand at home.

The southern African country has a peak demand of 2,000 MW and needs up to $4 billion to build planned new power stations to supply adequate electricity.(Reuters)