OWN CORRESPONDENT, Washington | Tuesday 10.30am.
THE International Monetary Fund on Monday approved a $193-million credit for Zimbabwe after authorities there pledged to curb inflation and provided details on military spending.
Zimbabwe Finance Minister Herbert Murerwa, in a letter to the IMF outlining 1999 government economic policies, disclosed that the country’s military campaign in the Democratic Republic of Congo will cost $3-million a month this year, or 0,6% of gross domestic product.
In a statement accompanying Monday’s announcement of the credit, IMF board member Shigemitsu Sugiaski said the Fund executive board “noted the risks that Zimbabwe’s military involvement in the Democratic Republic of Congo posed to fiscal and balance of payments performance and the stabilization more generally.”
The country spent $1,3-million a month on the DRC campaign last year but was forced to increase the allocation to pay for the deployment of additional troops, according to the letter, posted on the IMF web site.
Zimbabwe is estimated to have sent some 10000 troops to the DRC to support the Kinshasa government against rebels who launched an insurgency one year ago. Murerwa said in the letter that “the DRC is covering the bulk of the cost of our military involvement, … which includes fuel, transport and ammunition.”
The IMF in June froze its assistance to Zimbabwe after the government committed 3,000 more troops to the DRC, an IMF source said in the Zimbabwean capital Harare. Fund officials then pressed for clarification on the government’s military spending, he said, adding that Zimbabwe authorities were irritated by the request.
Elsewhere in the letter of intent, Zimbabwe set an overall growth goal this year of 1,2%, down from 1,6% in 1998, and an inflation rate reduced to 30% from 46,6% last year.
The IMF said the downward revision in gross domestic product was attributable to lower output in the mining and manufacturing sectors.
The country’s current account deficit will be limited to 6,3% of GDP this year, under the program and the budget deficit to 5,3%. In addition, the government will pursue tight monetary policies, continue with land reform on the basis of fair compensation and reduce the civil service from 163986 employees to 149600 by the end of 1999.
The privatisation effort will be accelerated, the exchange rate will be determined by market forces and import tariffs will be scaled back, according to the letter of intent.