September 9, 2005

IMF postpones decision on Zimbabwe’s expulsion

The International Monetary Fund's executive board has postponed casting judgment on whether to expel Zimbabwe as a member but pledged to revisit the issue within six months. The IMF board, which has twice before put off an expulsion verdict for Zimbabwe, said it deferred acting on the country's membership status because of recent arrears payments and some small exchange rate and monetary policy steps. "This decision provides Zimbabwe with a further opportunity to strengthen its cooperation with the IMF in terms of economic
policies and payments," the fund said in a statement.
The board, also stated that the country needed widespread fiscal, monetary and exchange rate reforms to reverse its economic woes. "There is a significant risk that unless strong
macroeconomic policies are undertaken without delay, economic and social conditions could deteriorate further," it said. "Providing adequate social safety nets and food security for
vulnerable groups ... are also critical priorities." Zimbabwe, which has been in continuous arrears to the IMF since February 2001, has paid the fund $120 million but still owes about $175 million. The payment, which contributed to the board's decision to postpone an expulsion move, raised questions about how the government had raised money when the
country was facing a shortage of foreign currency. The government said the funds came from export earnings, inflows from expatriate Zimbabweans and locals working for
foreign-owned organizations who are paid in foreign currency. The IMF said Harare has indicated it intends to fully eliminate its arrears to the fund by November 2006. (Rts)

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