Zimbabwe commits to IMF's Staff Monitored Programme

Published: 10 June 2013

Zimbabwe moved a step closer to re-admission into the IMF after Finance Minister Tendai Biti and RBZ governor Gideon Gono signed documents which commit to the institute's Staff Monitored Programme.

Biti told the media this morning that the agreement is part of steps towards the clearing of the country's $10.7 billion and re-engagement with the international financial community. The move comes after Cabinet gave the ministry approval for the programme.

"The SMP is a key component of Zimbabwe Accelerated Arrears Clearance, Debt and Development Strategy (ZAADS ) and Zimbabwe Accelerated Re-engagement Economic Programme, (ZAREP). This step signifies progress government has made in terms of re-engaging the financial community," said Biti adding that he was happy the IMF board had approved the gestation of ZADDS and ZAREP.

Of the $10.7 billion debt, $3.5 billion was in arrears. Biti said $2 billion was owed to World Bank, $600 million to the African Development Bank and $200 million to the IMF.

"We have been defaulting on our sovereign debt since 1999 and when you continue to default no one trusts you on the international market," Biti said.

Clearance arrears will unlock new financing arrangements from the IMF within the context of a Fund supported financial arrangement, which will then be used to repay the bridging loan obtained from the cooperating partners.

Last October, the IMF eased restrictions on technical assistance to Zimbabwe. A formal letter accepting the Staff Monitored Programme will be sent to IMF managing director, Christine Lagarde, next week, Biti said.

He added: "In order to clean yourself, you need to enter into engagements with the IMF. One cannot access anything unless you get the stamp of approval from them. You first need to go through a programme set by the IMF. "

Biti said significant progress has been achieved towards finalizing the negotiations with the IMF for the Letter of Intent (LOI), the Memorandum of Economic and Financial Policies (MEFP), and the Technical Memorandum of Understanding (TMU).

Biti said it was commendable government has crafted its own documents and re-engaged with the international community on its own terms.

He said that Zimbabwe was losing out on the money that was being availed to the continent by the development banks. "World Bank has committed $75 billion to Africa while AfDB was committed $30 billion. We are not going to get any of that if we don't show our credit worthiness and clear the arrears."

He said because of the approval the country's risk profile goes down and this means we can now get money from the international markets even through bonds just as was done by Rwanda and Zambia.

"At the moment we can't even raise $30 million from TBs. The idea of the SMP is to make Zim clean so that it can start accessing funding," said Biti

Gono said it was a momentous day for RBZ and the GNU as a whole as it is one outcome of its existence. He added that re-engagement has not been easy with a total 27 meetings having been held with the IMF since 1999.

Gono said because of the progress, the economy could now take off.
- Financial Express