Zimbabwe’s crippled economy received a boost yesterday when the IMF sanctioned a US$510 million loan, its first to the country in a decade.
But the move stirred conflict between the partners in Zimbabwe’s unity government amid fears it would used to shore up Zimbabwean President Robert Mugabe’s regime.
Zimbabwean Reserve Bank Governor Gideon Gono said the IMF had paid it US$400 million via a fund for developing countries hit by the global recession, with a further US$110 million to follow next week.
“I can confirm that the Reserve Bank of Zimbabwe did receive the funds,” Gono told the state-owned Herald newspaper, adding that he and Zimbabwean Finance Minister Tendai Biti would discuss how to deploy the funds.
The money will be used to replenish Zimbabwe’s dwindling foreign currency reserves and has been released on condition it is not diverted to other projects.
Political leaders hailed the decision as a sign that Zimbabwe’s unity government is ending the country’s spell in the international wilderness.
The IMF wound down its program there 10 years ago and formally withdrew in 2002, adopting a “declaration of noncooperation” with the Mugabe government.
Eddie Cross, an economist and policy co-ordinator for the Movement for Democratic Change (MDC), said: “This is the first significant IMF involvement with Zimbabwe for more than a decade”
“The magnitude is very substantial, about half our total budget this year. It’s a very large contribution,” Cross said.
The MDC, however, opposed Gono’s appointment at the reserve bank and will be anxious to ensure he does not control the funds in case they are directed to the coffers of Mugabe’s Zanu-PF party instead of the impoverished population.
“Gono is part of the reactionary elements fighting the unity government,” Cross said. “He’s been the principal culprit for the meltdown of the economy. We’ve been successful in ... circumventing him and that’s what we’ll do with this money.”
“It will be controlled very carefully, otherwise it will be used and abused and find its way to all sorts of nefarious activities and corrupt institutions,” he said.
Another MDC source said: “Gono has tried to take the money but Biti is trying to take charge.”
The source added that Zimbabwe may be unable to draw down the funds until it has shown it can repay a debt of US$5.7 billion to various creditors.
“The funds will come but it will be in the context of Zimbabwe having committed to clearing these debts,” he said.
The IMF told Zimbabwe two weeks ago that it would not receive the US$510 million until it repaid arrears of US$142.2 million. G20 leaders agreed in April to treble to US$750 billion the IMF’s capacity to help struggling economies. The IMF Web site said all 186 members were eligible to receive the money from Aug. 28 in proportion to their existing quotas with the fund.
Zimbabwe has suffered a decade of economic meltdown and record hyperinflation, worsened by the withdrawal of western aid over policy differences with Mugabe’s previous administration, before he formed the unity government this year with rival, Morgan Tsvangirai.
Western donors have demanded broad political and economic reforms before giving direct aid to the government. Donors currently provide only humanitarian aid.
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