Press Release No. 02/28

The Executive Board of the International Monetary Fund (IMF) on June 13, 2002 adopted a declaration of noncooperation regarding Zimbabwe's overdue financial obligations to the Fund, and suspended the provision of technical assistance to the member.

The declaration of noncooperation is one of the remedial measures taken to encourage members that fail to settle overdue financial obligations to the IMF to undertake the economic policies that would enable them to become current on their financial obligations to the IMF. The procedures on overdue financial obligations also calls for the IMF's Executive Board to decide if technical assistance to the member would be suspended or limited following the adoption of a declaration of noncooperation.

Zimbabwe first incurred arrears to the IMF in mid-February 2001. On September 24, 2001, the country was declared ineligible to use the general resources of the IMF and removed from the list of countries eligible to borrow resources under the Poverty Reduction and Growth Facility (PRGF). As of June 12, 2002, Zimbabwe's overdue obligations totaled SDR 101.9 million (about US$132 million), including SDR 57 million (about US$74million) to the IMF's General Department, and SDR 44.9 million (about US$58 million) to the PRGF Trust.

The IMF's Executive Board urged the Zimbabwean authorities to make full and prompt settlement of Zimbabwe's overdue financial obligations to the IMF. The Executive Board noted payments by Zimbabwe of US$1.6 million in 2001 and US$3 million in the first half of 2002 but regretted the further increase in the level of Zimbabwe's arrears to the Fund.

The Executive Board urged the Zimbabwean authorities to adopt an economic adjustment program to enable Zimbabwe to restore economic and financial stability as soon as possible. The Executive Board indicated that the Fund stood ready to assist the authorities in designing the necessary policy measures. The Executive Board will review further the matter of Zimbabwe's overdue financial obligations to the Fund within three months, at which time if Zimbabwe has not strengthened its cooperation with the Fund, consideration could be given to the initiation of the procedure on the suspension of Zimbabwe's voting and related rights in the Fund.

The following is the text of the declaration of noncooperation regarding Zimbabwe:

"The Fund notes that Zimbabwe has remained in arrears in its financial obligations to the General Department of the Fund and the Poverty Reduction and Growth Facility Trust since February 2001, was declared ineligible to use the Fund's general resources and removed from the list of PRGF-eligible countries on September 24, 2001, and has persisted in its failure to fulfill its obligations under the Fund's Articles of Agreement and under the PRGF Trust, with its arrears to the Fund amounting to SDR 101.9 million as of June 12, 2002, equivalent to 28.8 percent of Zimbabwe's quota;

"Finds that Zimbabwe is not cooperating with the Fund towards the discharge of its financial obligations to the Fund;

"Urges Zimbabwe to discharge its financial obligations to the Fund promptly and cooperate with the Fund;

"Reminds Zimbabwe that arrears to the Fund, which is a cooperative institution, are detrimental to the whole membership of the Fund in that they hamper the proper performance by the Fund of its function in assisting members facing balance of payments difficulties; and

"Notifies Zimbabwe that in line with the timetable of procedures on arrears, the next review of Zimbabwe's overdue financial obligations to the Fund would need to be held by September 13, 2002, at which time the Fund could consider initiating the procedure on the suspension of Zimbabwe's voting and related rights in the Fund, if Zimbabwe has not strengthened its cooperation with the Fund by then."

On September 24, 2001, Zimbabwe was declared ineligible to use the general resources of the IMF and removed from the list of countries eligible to borrow resources under the PRGF (http://www.imf.org/external/np/sec/pr/2001/pr0140.htm).

Further information on how the Fund deals with overdue financial obligations is available at http://www.imf.org/external/pubs/ft/pam/pam45/contents.htm (Financial Organization and Operations of the IMF, see Chapter 5).