IMF Executive Board Considers Zimbabwe's Arrears to the FundPress Release No. 07/30
February 23, 2007
The Executive Board of the International Monetary Fund (IMF) met today to consider issues related to Zimbabwe's outstanding arrears to the Poverty Reduction and Growth Facility-Exogenous Shocks Facility (PRGF-ESF) Trust.1 The Board also considered the sanctions, including the suspension of voting and related rights, that had been imposed on Zimbabwe with respect to its arrears to the IMF's General Resources Account (GRA),2 which were settled in full in February 2006 (see Press Releases No. 06/33 and No. 06/45).
With regard to Zimbabwe's outstanding arrears to the PRGF-ESF Trust, the Board expressed deep concern over the deteriorating economic and social conditions and regretted that the authorities have not undertaken the policies recommended by the IMF. The Board also noted that Zimbabwe's payments towards settlement of its PRGF-ESF arrears have been minimal and that its arrears to the Trust have further increased. The Board urged the authorities to decisively address the ongoing economic crisis by immediately implementing a comprehensive stabilization package comprising several mutually reinforcing actions centered on fiscal tightening (including transferring the quasi-fiscal activities carried out by the Reserve Bank of Zimbabwe to the budget) and price and exchange regime liberalization. The Board also called for fundamental structural reforms, including public enterprise and civil service reforms, strengthened property rights and improvements in governance.
In light of Zimbabwe's deteriorating policy performance and payments to the IMF, the Board kept in place the decisions previously taken to address Zimbabwe's arrears to the PRGF-ESF Trust—the declaration of noncooperation, the suspension of technical assistance, and the removal of Zimbabwe from the list of PRGF-ESF-eligible countries. The Board urged Zimbabwe to resolve its remaining arrears to the PRGF-ESF Trust promptly, and agreed that it will again consider Zimbabwe's arrears to the Trust in six months.
Zimbabwe has been in continuous arrears to the IMF since February 2001 and is the only case of protracted arrears to the PRGF-ESF Trust, which currently amount to SDR 86 million (about US$129 million).
With respect to the suspension of Zimbabwe's voting and related rights, the Board made no decision and agreed to return to the issue at a later date.