€356m IMF loan a boost to to Harare

ZIMBABWE’S CRIPPLED economy received a boost yesterday when the IMF sanctioned a $510 million (€356 million) loan, its first …

ZIMBABWE’S CRIPPLED economy received a boost yesterday when the IMF sanctioned a $510 million (€356 million) loan, its first to the country in a decade.

The move stirred conflict between Zimbabwe’s unity government partners amid fears it would be used to shore up President Robert Mugabe’s regime.

Gideon Gono, Zimbabwe’s reserve bank governor, said the IMF had paid it $400 million via a fund for developing countries hit by the global recession, with the $110 million to come next week.

“I can confirm that the Reserve Bank of Zimbabwe did receive the funds,” Mr Gono told the state-owned Herald newspaper in Harare, saying he and the finance minister, Tendai Biti, would discuss how to deploy the funds.

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The money will be used to replenish Zimbabwe’s dwindling foreign currency reserves and has been released on condition that it is not diverted to other projects.

Political leaders hailed the decision as a sign that Zimbabwe’s unity government was ending the country’s spell in the wilderness. The IMF wound down its programme there 10 years ago and withdrew in 2002, adopting a “declaration of non co-operation” with Mugabe’s government.

Eddie Cross, an economist and policy co-ordinator for the Movement for Democratic Change (MDC), said: “This is the first significant IMF involvement with Zimbabwe for more than a decade.

“The magnitude is very substantial, about half our total budget this year. It’s a very large contribution.” But the MDC opposed Mr Gono’s reserve bank appointment and will be anxious to ensure he does not control the funds in case they are directed to Mugabe’s Zanu-PF party instead of the impoverished population.

The IMF told Zimbabwe two weeks ago it would not receive the $510 million until it repaid arrears of $142.2 million. G20 leaders agreed in April to treble to $750 billion the IMF’s capacity to help struggling economies.

Zimbabwe has suffered a decade of economic meltdown and record hyperinflation. Western donors have demanded broad political and economic reforms before giving direct aid to the government. – (Guardian service)