Zimbabwe still waiting for IMF response to aid plea

The government of Zimbabwe is still waiting to hear back from international lenders, including the International Monetary Fund (IMF), regarding the potential for debt relief, after the country was overlooked for coronavirus-related aid programmes because of its huge outstanding payments. 

On 2nd April, the country’s finance minister, Mthuli Ncube, wrote to the heads of the IMF, the World Bank, the African Development Bank, Paris Club and European Investment Bank to ask for debt relief measures similar to those granted to other African countries. According to recent reports, the government is still yet to hear back over a month later. 

In the letter, Mr Ncube explained that the coronavirus pandemic would likely have a “devastating impact” on the health and finances of Zimbabwe, and that domestic resources to tackle the pandemic “are insufficient”.

“Access to external financing is severely constrained due to external debt arrears,” the minister lamented.  

Relations between Zimbabwe and multilateral lenders have soured lately as the country has failed to keep up with payments on its $8bn of external debt. Last month Zimbabwe, along with Sudan and Eritrea, was pronounced ineligible for IMF aid because of its enormous outstanding payments. 

As well as the coronavirus pandemic, Zimbabwe is also currently recovering from its worst drought in 40 years, a cyclone, and two decades of economic mismanagement that has left the country with an annual inflation rate of 676%. 

Minister Ncube estimates that Zimbabwe’s economy will contract by between 15% and 20% this year. 

In his letter to lenders, the minister said that the government is willing to make a number of concessions if organisations agree to “high level” talks.

Such concessions include the adoption of a market-related exchange rate, ensuring the central bank can no longer lend money to the government, cracking down on corruption, and instituting electoral reforms. 

Mr Ncube also offered to sign an agreement by June that would compensate white commercial farmers who had been forced off their lands during the country’s violent land-reform programme. 

In return, the government is seeking to reschedule or cancel bilateral debt payments over a period of 15 years. It is also seeking a bridging loan to allow it to clear its debts to the World Bank, African Development Bank and European Investment Bank.