Zimbabwean officials on Monday began a week of crunch talks with a delegation from the International Monetary Fund (IMF), which is weighing whether to expel the Southern African country from its ranks.
”We began meeting,” said Finance Minister Herbert Murerwa, adding: ”We are not ready to make any comment at this time.”
The delegation will be holding meetings until next Monday after which it is expected to issue a statement on the conclusion of its mission.
The talks come ahead of the meeting on September 9 of the IMF board that is to decide whether to strip Zimbabwe of its membership in the lending club because of its failure to meet its obligations.
Zimbabwe has fallen behind on repayments of IMF loans totalling about $300-million (â,¬245-million) and has failed to meet IMF demands to limit public spending.
South Africa earlier this month agreed to step in with a loan to ensure that its neighbour retains its IMF membership but Zimbabwe has not yet said whether it will accept it.
Talks held in Pretoria three weeks ago reportedly yielded a tentative agreement on a loan of between $200-million and $500-million including about $100-million to be paid to the IMF.
But South Africa is pressing Zimbabwe to enact reforms to prevent the economy from sliding further into chaos and recession.
The IMF warned during its last visit in June that the government needed to take ”decisive action” to curb spending, combat inflation and adjust its exchange rates.
Since then, the central bank has doubled interest rates to over 200% to try to rein in inflation and allowed the exchange rate to slide on the foreign currency auction market from Z$18 000 to the US greenback to over Z$24 000.
”The government is making an effort,” said private economist John Robertson, who warned that expelling Zimbabwe from the IMF would plunge the country into isolation.
”We would face the danger of becoming North Korea or Burma. We would be sealed off from any form of inspection from foreigners and that would immensely put off foreign investors and discourage even Zimbabweans from doing anything,” said Robertson.
Zimbabwe’s economy has shrunk by 30% in the past four years following the seizures in 2000 of about 4 500 white-owned commercial farms which sent agricultural production plummetting.
President Robert Mugabe’s government has blamed drought and sanctions by the European Union and the United States for the country’s economic decline.
Murerwa last week presented a supplementary Budget to pay wages, import food and build new housing, after admitting that targets for economic growth and inflation would be missed.
Inflation, already hovering at 164,3% in June, shot up to 254,8% in July, dealing a blow to the government’s goal of bringing inflation down to 80% by the end of the year.
The government is also spending on a housing reconstruction in the wake of an urban clean-up campaign in which shacks, market stalls, shops and homes were demolished.
The United Nations has condemned the government for the campaign, saying it has left 700 000 Zimbabweans homeless or without incomes, or both, at a time of severe food shortages and economic crisis. – Sapa-AFP