Saturday, February 20, 2010

(NEWZIMBABWE) IMF restores Zimbabwe’s voting rights

IMF restores Zimbabwe’s voting rights
by Gilbert Nyambabvu
20/02/2010 00:00:00

THE International Monetary Fund (IMF) has unanimously voted to restore Zimbabwe's voting rights ending a suspension of nearly seven years but insisted financial arrears mean that the country remains ineligible for further loans.

In a statement released on Friday the IMF said although Zimbabwe is now eligible to use resources from its General Resources Account (GRA) the country will not be able to access support under this facility until it settles arrears of US$140 million to its Poverty Reduction and Growth Trust (PRGT).

“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.

“Following (Friday’s) decision any remaining issues on further normalization of relations will be addressed over time,” the statement read.

The widely expected restoration of voting rights which among other things means the country can now appoint a governor to the IMF, participate in the election of an executive director for its Board, or cast its vote in decisions on IMF policy or country matters followed a request by the finance minister, Tendai Biti.

The development which signals a thawing of relations between the country and development partners also comes after the United States- the only IMF member which can block executive board decisions- indicated that it would support the removal of the suspension.

Zimbabwe’s voting rights were suspended in June 2003 as the agency became increasingly frustrated with the country’s failure to “sufficiently strengthen cooperation with the IMF in areas of policy implementation and payments”.

The agency had also moved to initiate “compulsory withdrawal” procedures but the country managed the stave-off this action by fully settling its General Resources Account arrears in 2006.

Meanwhile Zimbabwe still owes the IMF and other multi-laterals lending agencies such as the World Bank and the African Development Bank up to US$1.3 billion.

However the establishment of a coalition government between president Robert Mugabe and long-time rival Morgan Tsvangirai, now the country’s prime minister,- supported by positive economic policy measures- has been largely welcomed by the country’s development partners.

In May last year, the IMF approved technical assistance in certain areas, citing a significant improvement in Zimbabwe’s cooperation on economic policies.

The organisation however, urged the country to clear its arrears noting that as long as this was not done technical assistance would remain suspended except in "targeted" areas.

“A number of remedial measures remain in place, as Zimbabwe still has outstanding arrears to the PRGT. These are the declaration of non-cooperation; the suspension of IMF technical assistance, except in targeted areas; and the removal of Zimbabwe from the list of PRGT-eligible countries,” the IMF press statement added

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