Press Release: IMF Suspends Zimbabwe's Voting and Related Rights
June 6, 2003
The Executive Board of the International Monetary Fund (IMF) has suspended Zimbabwe's voting and related rights, after having determined that Zimbabwe had not sufficiently strengthened its cooperation with the IMF in areas of policy implementation and payments. As a result of today's decision, Zimbabwe can no longer appoint a Governor or Alternate 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.
Economic and social conditions in Zimbabwe have deteriorated progressively over the past four years. Real output has dropped by one-third, inflation has reached 270 percent in the year through April 2003, and welfare and poverty indicators have deteriorated. The Zimbabwean authorities introduced some policy measures since early 2003 to arrest the decline in economic activity, including a devaluation of the exchange rate of the Zimbabwean dollar from Z$55 per U.S. dollar to Z$824 per U.S. dollar for most transactions, adjustments in fuel and electricity tariffs, rolling back price controls, and raising interest rates moderately. However, the authorities have not adopted the comprehensive and consistent policies needed to address Zimbabwe's serious economic problems.
Zimbabwe has been in continuous arrears to the IMF since February 2001. As of end-May 2003, Zimbabwe's arrears to the IMF amounted to SDR 164.9 million (US$233 million), or about 47 percent of its quota in the IMF.
The suspension of a member's voting and related rights is one in a series of escalating remedial measures that the IMF applies to members that fail to meet their obligations under its Articles of Agreement. On September 24, 2001, Zimbabwe was declared ineligible to use IMF's general resources and was removed from the list of countries eligible to use resources under the IMF's Poverty Reduction and Growth Facility (see Press Release No. 01/40). On June 13, 2002, the Executive Board adopted a declaration of non-cooperation with respect to Zimbabwe and suspended all technical assistance to the country (see Press Release No. 02/28). On September 11, 2002, the Executive Board agreed to initiate the procedure to suspend Zimbabwe's voting and related rights in the IMF.
The Fund urged the authorities to build on their recent efforts to strengthen cooperation. The staff is ready to continue assisting the authorities. The Fund would support the reinstatement of voting rights if Zimbabwe improves its cooperation on economic policies and payments. The Executive Board will review Zimbabwe's overdue financial obligations to the IMF again within six months of the date of this decision.
Additional information on how the IMF deals with overdue financial obligations is available in Chapter V of Financial Organization and Operations of the IMF (IMF Pamphlet Series No. 45, 6th ed., 2001). This publication is also available on the IMF's external website at http://www.imf.org/external/pubs/ft/pam/pam45/contents.htm.