Zimbabwe under IMF (and Paris Club) thumb... (fwd)

[Robert Weissman <rob@essential.org>]

This note and clip from South African stop-IMF subscriber Patrick Bond:

Dear Zimbabwe-watchers,

I was in Harare and Mutare this time last week, and have begun 
raising my hopes that the democratic forces are getting tougher 
around economic issues. But the IMF loan issue remains murky; as soon 
as Mugabe says anything cheeky the bourgeois press come down on him 
very hard, and this leaves his progressive opponents somewhat taken 
aback.

Here's more evidence of why they have to straighten their spines. 
What is outrageous about this report is that in an interview in the 
Financial Gazette on 20/5/99, IMF Africa czar Michael Nowak said, in 
the answer to the very first question, that the IMF's new conditions 
for the long-awaited US$53 mn loan (upon which another several 
hundred million US$ from other "donor"-lender countries depends) are 
a) get rid of price controls on staple foods (which Mugabe put on 
last year after violent riots following price increases), and b) get 
rid of import tariffs on luxury goods imposed late last year (also 
last week it was revealed that Zimbabwe's inequality index had risen 
dramatically as a result of the IMF-World Bank structural adjustment 
programme, to levels higher even than South Africa).

So here we have the IMF demanding that the only two little things 
that Mugabe has done recently in the interests of the masses be 
repealed. And not only is the IMF withholding a new loan (which, 
incidentally, progressive forces like the Zim Union of Journalists 
have requested be denied on grounds of Mugabe's human rights 
violations, harking back to the anti-apartheid financial sanctions 
campaign), but now the Western powers are joining with the claim that 
any debt relief Mugabe may get in future hinges upon taking the IMF 
loan now... by agreeing to the pro-rich, anti-poor conditions.

It's farcical... and tragic at the same time...

(fyi, Z$38=$US1)

Patrick Bond
pbond@wn.apc.org

Zimbabwe Independent, 27/5/99

Prospects of Paris Club debt relief recede 

ZIMBABWE, which is saddled with $90 billion in foreign debt, risks
being left out of debt rescheduling concessions by international
donors later this year unless the International Monetary Fund (IMF)
releases the US$53 million balance-of-payments support it has been
sitting on, the Zimbabwe Independent established this week.

The Paris Club, a grouping of Western state banks and private donors
and financiers will be meeting in September to consider debts by poor
Third World countries. European Union officials said Zimbabwe, which
has already started to default on loan repayments, was likely to face
a torrid time at the debt rescheduling talks to be held in London.

"If Zimbabwe can get an agreement with the IMF, it would be easier to
discuss with the Paris Club about debt rescheduling," said French
embassy trade commissioner Alain le Bel.

"This is not a 100% condition but it brings in the confidence. If the
club knows that a country has a good relationship with the IMF, it is
easier to get a positive answer," said Le Bel.

Another European embassy official said time was running out for
Zimbabwe to be considered for debt rescheduling unless the IMF
released the funds soon.

"Zimbabwe's chances of debt reconsideration are going to be very
difficult unless the money is released in the next few weeks. The
Paris Club will definitely take into consideration Zimbabwe's ability
to secure a finance package in the absence of the balance-of-payments
support," he said.

In addition to the $90 billion foreign debt, the government's domestic
debt stood at $42,6 billion at the end of last year. 

The total debt of $132,6 billion then accounted for 95% of gross
domestic product.

Zimbabwe has been anxiously awaiting IMF funding since the beginning
of the year, and as patience appears to be evaporating in the ranks of
the local political leadership, President Mugabe has launched scathing
attacks on the Bretton Woods institution, despite concerted attempts
by the Ministry of Finance to court the international financiers.

Harare-based economic analyst Mervin Ellis said technically Zimbabwe
qualified for debt rescheduling as the country's economic status made
it suitable to be classified as a highly indebted poor country (HIPC).
He said countries in the same class included Zambia, Mozambique,
Malawi and Uganda. He said Zimbabwe could however only obtain debt
rescheduling if it returned to the reform track.

"Zimbabwe has to demonstrate that it is going back on the reform road
for it to be considered for debt rescheduling," Ellis said.