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Zimbabwe: Government Arrears On IMF Debt Rise to US $134
Million
Financial Gazette (Harare) August 29, 2002
ZIMBABWE'S outstanding commitments to the International Monetary Fund (IMF) have risen to more than US$134 million in the past two months, with the government paying only US$3.15 million or 0.37 percent of budgeted interest payments.
Figures released by the IMF this week reveal that Zimbabwe's outstanding commitments to the Bretton Woods institution stood at 102.1 special drawing rights (SDRs) at the end of July. An SDR is an artificial currency unit made up of a basket of national currencies used by the IMF and other international bodies in transactions with their members. It is an international reserve asset also used as the unit of account by several other international organisations, including the World Bank.
Zimbabwe was suspended from receiving IMF technical assistance in June after failing to meet arrears on its debt to the Fund, which then stood at US$132 million. The Ministry of Finance this week conceded that it had failed to pay interest on its external debt during the first five months of this year due to an acute shortage of foreign currency. "Only $173.4 million or about one percent was paid against a target of $46 billion," the ministry said in its latest Treasury Bulletin. Total interest on both the domestic and external debt paid between January and May 2002 was $22.4 billion against a target of $46 billion, which resulted in "savings" of more than $23 billion.
Zimbabwe has since 1999 skipped payments on its foreign commercial and concessional loan payments because of an acute shortage of foreign currency. The first time was in April 1999 when the cash-strapped government missed payments on a loan from the World Bank, a development that blocked the release of funds from other key backers of the country's stalled economic reforms.
The external debt repayments have been affected by the erratic inflows of hard cash, which are presently estimated at about US$50 million a month, well below the country's normal monthly requirements of about US$200 million.
Former finance minister Simba Makoni had early last year indicated that the government had set aside almost US$500 million for servicing its total external commitments although analysts had at the time dismissed the target as optimistic because of the country's deteriorating economic fundamentals. The Zimbabwean authorities owe more than US$4.5 billion to several multilateral institutions and Western countries. These include the International Monetary Fund, the World Bank, the African Development Bank, the European Investment Bank, the United States of America, Britain, France and Germany. The defaults on the external loan commitments have cost Zimbabwe crucial economic aid worth millions of American dollars, triggering a crippling balance-of-payments crisis and severe shortages of fuel and other essential commodities.
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