The Executive Board of the International Monetary Fund (IMF) approved yesterday on a lapse of time basis, the removal of the remedial measures applied to Zimbabwe that had been in place because of the member’s overdue financial obligations to the Poverty Reduction and Growth Trust (PRGT), effective November 14, 2016.
Under IMF rules, the Executive Board takes decisions under its lapse of time procedure when it is agreed that a proposal can be considered without convening formal discussions
These measures are: (i) declaration of noncooperation with the IMF; (ii) the suspension of technical assistance (which had already been partially lifted; and (iii) the removal of Zimbabwe from the list of PRGT-eligible countries.
This follows Zimbabwe’s full settlement of all of its overdue financial obligations to the PRGT of SDR 78.3 million (about $107.9 million) on October 20, 2016. Zimbabwe had been in continuous arrears to the PRGT since February 2001 and was the only case of protracted arrears to the PRGT. Zimbabwe is now current on all of its financial obligations to the IMF.
The IMF on June 13, 2002 adopted a declaration of non-cooperation regarding Zimbabwe’s overdue financial obligations to the Fund, and suspended the provision of technical assistance to the member. The declaration of non-cooperation 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 non-cooperation.
The suspension of technical assistance was lifted in May 2009, where IMF said it would provide assistance in (i) tax policy and administration; (ii) payments systems; (iii) lender-of-last-resort operations and banking supervision; and (iv) central banking governance and accounting. It was further relaxed when Zimbabwe agreed to a Staff Monitored Programme in 2012.
Notwithstanding the settlement of overdue financial obligations to the PRGT and the removal of remedial measures, consideration of any future request for IMF financing would also require Zimbabwe to comply with other applicable IMF policies, including to: (i) resolve its arrears to multilateral creditors (including the African Development Bank (AfDB), the World Bank, and other multilateral institutions), bilateral official creditors, and external private creditors (if any); and (ii) implement strong fiscal adjustment and structural reforms to restore fiscal and debt sustainability and foster private sector development.