- High-ranging members of the International Monetary Fund (IMF) today were in Zimbabwe, where they had talks with President Robert Mugabe. Zimbabwe wanted to establish a "meaningful relationship" with the IMF, but the Fund urged President Mugabe to "demonstrate strengthened cooperation," or else Zimbabwe would be thrown out of the Fund.
Abdoulaye Bio-Tchané, Director of the IMF African Department, and other IMF officials yesterday and today were received by the Zimbabwean government in Harare. They met with Acting Finance Minister Herbert Murerwa, Reserve Bank Governor Gideon Gono, President Mugabe and other officials. Mr Bio-Tchané however also met with Western ambassadors in Harare, the potential "donor countries", as the Fund calls them.
- Yesterday, I had the privilege of meeting His Excellency President Mugabe, said Mr Bio-Tchané in a statement today. "My meeting was intended to provide an opportunity for me to explain personally to the President the state of Zimbabwe's relations with the IMF - which are now at a critical juncture - and how we could establish a positive framework for moving forward," he said.
The discussions with President Mugabe had been "informative and cordial" and covered a number of issues, according to the IMF. The President had reassured the IMF representative that Zimbabwe was "prepared to have a meaningful relationship with the IMF," even if he did "not always agree with its economic advice," Mr Bio-Tchané referred from his meeting with the Zimbabwean dictator.
President Mugabe had "stressed that Zimbabwe needed to grow and prosper as a sovereign nation. In this regard, noting the country's rich agricultural and mining resources, he observed that, with land reform now largely completed, these sectors - particularly mining - needed more investment," the President had told the IMF representative.
The Zimbabwean leader had also emphasised that Zimbabwe's prospects were enhanced by what he called "the skill level of its workforce, which was the result of substantial public investment in education since independence." The two then discussed economic and structural issues facing the country today.
Mr Bio-Tchané on the other hand told the Zimbabwean leadership that the Fund "wanted to work with the authorities" to help Zimbabwe achieve "its full potential" and to integrate the country more closely with the international community. Harare authorities however were in a hurry if they still wanted any aid from the IMF, he explained.
- In order for the IMF to help Zimbabwe, the authorities need to seize this window of opportunity to demonstrate strengthened cooperation with the Fund before its Executive Board next considers the issue of Zimbabwe's compulsory withdrawal, Mr Bio-Tchané made it clear. In other words, President Mugabe was given a last chance.
The IMF representative explained that there were three ways Harare authorities could "demonstrate" its willingness to cooperate with the Fund. First of all, Zimbabwe needed to embark on comprehensive structural reforms, including good governance, "to lay the basis for a significant improvement in investor confidence." This would counter much of the Mugabe administration's economic policies.
A second policy change urged by the IMF was the "concerted efforts to rebuild relations with other official creditors, which over time will also lead to the external financing needed to ensure these policies are sustainable." This, however, would first necessitate a softened foreign policy as President Mugabe is on hostile terms with most dominant creditor nations.
Finally, Zimbabwe needed to significantly increase its payments to the IMF, Mr Bio-Tchané said. Harare's failure in paying the IMF is the principal reason for the severing of ties with the Fund. The IMF representative however indicated that this was negotiable as services would be "in line with Zimbabwe's payments capacity."
- Such an increase should be possible without undue import compression and hardship to the Zimbabwean people if a comprehensive policy package supported by external financing is adopted, said Mr Bio-Tchané.
The next move is no up to the Zimbabwean government, which will have to indicate whether it is willing to and capable of launching major economic reforms. The reform package indicated by the IMF however may seem too comprehensive for Harare authorities as it counters key parts of the Mugabe ideology.
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