Zimbabwe fails to pay the IMF
Tendai Biti has said the money should be used "very carefully"
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By Tom Powell. |  |
Monday, 21, Sep 2009 09:00
Zimbabwe has failed to meet its quarterly loan payment to the International Monetary Fund (IMF), a move likely to scare away international money lenders from borrowing the country money due to its poor debt payment record.
The southern African nation - already in alarming debt of US$5.7 billion to both external and domestic creditors - failed to meet its US$100,000 quarterly loan payment to IMF.
Zimbabwe owes the IMF SDR89 million or US$138 million.
The IMF commented: "As noted at the executive board's discussion of the 2009 Article IV consultation in May 2009, economic and social indicators in Zimbabwe worsened significantly, culminating in an acute and ongoing humanitarian crisis.
"Since the last review, Zimbabwe has made two payments to the Fund in a total amount equivalent to SDR 0.44 million.
"In April 2009, the Zimbabwean authorities committed to regular payments to the Fund of about US$100,000 per quarter, starting in July 2009. No such payments have been received to date."
The southern African nation has a poor debt payment record and risks losing assets over failure to clear liabilities.
Zimbabwe has also been relentlessly sued by creditors who include KFW of Germany, Daro Film Distributors and UBS AG of Switzerland, SACE of Italy, ING Bank of the Netherlands, EximBank of US and West Merchant Bank and Lloyds of the UK abroad over debts.
Recently, the IMF withheld about US$102 million (SDR 66 million) of Zimbabwe's allocation of the Bretton Woods institutions special drawing rights until the country has cleared its IMF debt.
The US$102 million is part of the US$500 million allocated to Zimbabwe in IMF special drawing rights to Zimbabwe under a $250 billion agreement to bolster the reserves of the fund's 186 member countries.
The US$400 million that has been transferred to Zimbabwe by the IMF has sparked a turf war over how it will be used between the country's finance minister, Tendai Biti and central bank governor, Gideon Gono.
Mr Gono, who is calling for the return of the worthless Zimbabwe dollar, is recommending that US$140 million of the money received from the IMF be used to clear the arrears.
But Mr Biti, who has noted that he fears the governor might misuse the funds, has said that the IMF allocation to the country will only be used next year when a new national budget comes into effect.
"We have to use any money that we get very carefully, under a proper fiscal plan," the finance minister recently said.
Zimbabwe has suffered a decade of economic meltdown, worsened by the withdrawal of western funding over policy differences with President Mugabe's previous administration, before he formed the unity government with rival MDC leader Morgan Tsvangirai, now prime minister.