Press Release: IMF Suspends Zimbabwe's Voting and Related Rights
IMF News, June 6, 2003
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- Published: June 6, 2003
Executive action and immediate consequences
- Press Release No. 03/80; June 6, 2003.
- The Executive Board of the International Monetary Fund (IMF) has suspended Zimbabwe's voting and related rights after determining that Zimbabwe had not sufficiently strengthened its cooperation with the IMF in areas of policy implementation and payments.
- As a result of the decision:
- Zimbabwe can no longer appoint a Governor or Alternate Governor to the IMF.
- Zimbabwe cannot participate in the election of an Executive Director for its Board.
- Zimbabwe cannot cast its vote in decisions on IMF policy or country matters.
- The Executive Board will review Zimbabwe's overdue financial obligations to the IMF again within six months of the date of this decision.
Economic and social conditions in Zimbabwe (as reported)
- Real output has dropped by one-third.
- Inflation has reached 270 percent in the year through April 2003.
- Welfare and poverty indicators have deteriorated.
- Policy measures introduced since early 2003 include:
- 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.
- Raising interest rates moderately.
- The authorities have not adopted the comprehensive and consistent policies needed to address Zimbabwe's serious economic problems.
Financial arrears and quota impact
- 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.
Escalating remedial measures and prior actions
- The suspension of voting and related rights is one in a series of escalating remedial measures applied to members that fail to meet obligations under the IMF's Articles of Agreement.
- Prior steps taken with respect to Zimbabwe:
- 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.
IMF stance and conditional path to reinstatement
- The Fund urged the authorities to build on their recent efforts to strengthen cooperation.
- IMF 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.
Reference to IMF operational guidance
- 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.
Source: Press Release: IMF Suspends Zimbabwe's Voting and Related Rights; Press Release No. 03/80; June 6, 2003; International Monetary Fund.