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IMF says no reforms, no rescue package for Zimbabwe
Sebastian Nyamhangambiri, ZimOnline
June 14, 2007

http://www.zimonline.co.za/Article.aspx?ArticleId=1524

Berlin - The International Monetary Fund this week said it was "deeply concerned" by economic crisis in Zimbabwe but ruled out an rescue package unless Harare repays outstanding debt and implements comprehensive economic reforms. An IMF spokesperson interviewed by Zim Online by phone from the German capital, Berlin, described monetary policy measurers unveiled by the Reserve Bank of Zimbabwe (RBZ) last April as ad-hoc and inadequate to break hyperinflation cycle that has left consumers impoverished and the economy in deep crisis. "Recent ad-hoc policy changes will not resolve the crisis. Changes announced in the April monetary policy statement fall far short of a comprehensive package that would be needed," said the spokesperson from the IMF's Washington headquarters. Inflation - which shot to 4 530 percent in May and is described by President Robert Mugabe as Zimbabwe's number one enemy - is the most visible sign a deep economic recession that has left more than 80 percent of the labour force without jobs and spawned shortages of food, fuel and foreign currency.

The IMF official, who said the Bretton Woods institution was ready to help Harare to draw up a comprehensive policy package to address Zimbabwe's economic ills, said such a package would include among other things eliminating quasi-fiscal spending by the RBZ, liberalising the exchange rate and lifting controls on prices of essential commodities. She said: "A strong upfront fiscal consolidation, including elimination of quasi-fiscal activities, would be a particularly critical element of a successful stabilisation programme. Other main elements would include exchange rate unification and full liberalisation of the exchange regime for current international payments and transfers, liberalisation of price controls and imposition of hard budget constraints for public enterprises." RBZ governor Gideon Gono was not immediately available to respond to the IMF's recommendations. Gono, tasked by Mugabe to lead efforts to revive the comatose economy is known to prefer co-operating with the IMF. However, Gono has rejected calls by the Fund to stop quasi-fiscal spending and to liberalise the exchange rate, arguing that Zimbabwe was in a unique situation that demanded unorthodox solutions. The IMF withdrew balance-of-payments support to Zimbabwe in 1999 following disagreements with President Robert Mugabe over fiscal policy and other governance issues. The Fund's withdrawal and Mugabe's chaotic farm seizures that began in 2000 have plunged Zimbabwe into an economic meltdown described by the World Bank as unprecedented for a country not at war.

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