The International Monetary Fund’s decision this week to reinstate Zimbabwe on its books as a full member, which means it can once again apply for loans, was a victory for the Vice President Emmerson Mnangagwa faction in the ongoing secession battle, insiders said on Friday.
Gerry Rice, director of communications at the International Monetary Fund (IMF) said Zimbabwe had repaid its US$107 million (R1.4 billion) debt October 20.
“Zimbabwe is now current on all its financial obligations to the IMF,” he said.
Patrick Chinamasa, finance minister, who has tried – with little success – to reform some of the Zimbabwe government’s wild spending and unfriendly investment laws, spearheaded Zimbabwe’s attempts to return to international capital markets, and the IMF was a prime target.
It is not clear yet how he raised the cash as Zimbabwe cannot even pay civil servants, including soldiers, on time, and its revenue collection has fallen short of target most of this year.
At present very few people can withdraw more then US$100 (R1400) a day from their accounts, and pensioners and others regularly sleep next to banks, to be first in the queue next morning to withdraw their small government salaries or pensions.
A black market has emerged in the last few weeks for cash, and Zimbabwe mainly uses US dollars since its own currency collapsed in 2008. So anyone wanting cash to pay salaries, since electronic transfers are rarely possible these days – is paying between eight and 12 percent more to get notes.
A well-informed senior diplomat in Harare said the IMF decision to accept Zimbabwe back, was a victory for Mnangagwa as Chinamasa is one of his allies, and it was he who met the IMF in Lima last year and agreed to measures to return Zimbabwe to the international financial community.
“They (Mnangagwa’s reformists) tried to save the Lima process by reimbursing IMF. That was the easiest part of it. The IMF is a starting point. We don’t know where this will lead, but there is finally a sprinkle of hope for Zimbabwe.”
He added he was not sure if Zimbabwe would now somehow return to good standing with the World Bank and African Development Bank which it owes a total of about US$1,7 billion. It once appeared that British politician Peter Mandelson, who is also chairman of international Lazard Bank was trying to raise a loan to Zimbabwe to pay the international financial institutions’ debt. But he has denied this.
African Confidential journal said recently that the IMF had often been too optimistic about the Zimbabwe economy. “Since 2014 successive IMF projections concerning Zimbabwe’s growth have shown that the organisation has underestimated the speed of economic collapse. For example its initial estimates of 2015 and 2016 growth were more than two or three times actual growth.”
The IMF and other international financial institutions had also made it clear to the Zimbabwe government that it must pay compensation to evicted white farms for the improvements on their land.
Nearly all 4000 former farmers who were forced off their land have completed sophisticated valuations of their properties by qualified valuers, via a Zimbabwe company called VALCON.
But the government insists it will also do valuations and claims it has recently paid out more then R600 million to evicted white farmers. But it has not revealed who was paid, and whether they were paid in cash or treasury bills from the Reserve Bank of Zimbabwe which are worth a fraction of their face value in real money.
And R600 million would in any case only be a small fraction of the total amount the government owed to the farmers which it is believed runs into several billions rands.