Zimbabwe expects first IMF loan this year since 1999

Zimbabwe to get first IMF loan in nearly two decades amid worst drought since 1992

Photo by: Reuters
Photo by: Reuters

Zimbabwean central bank governor John Mangudya gestures while delivering his 2016 Monetary Policy statement in Harare, February 4, 2016.

Zimbabwe central bank governor said on Wednesday that the country would receive a loan from the International Monetary Fund (IMF) in the third quarter of this year, after paying off foreign lenders by the end of June.  

The loan would be the first since 1999.

President Robert Mugabe’s government agreed to major reforms including compensation for evicted white farmers and a big reduction in public sector wages.  

Central bank governor, John Mangudya, said that the IMF would decide the exact amount of the loan to issue at a later date. The fund had agreed to double the amount available for Zimbabwe, known as a financial quota, to $984 million, he said.

"We are talking about the third quarter, that's when you see most of the action happening," Mangudya told Reuters in an interview, referring to when Harare expected the loan.

An unnamed country is also expected to give Zimbabwe a loan of $896 million to pay off balances to the World Bank.   

In addition, Harare would receive a loan of $601 million from the African Export-Import Bank to clear arrears to the African Development Bank (AfDB).

Zimbabwe would then receive the same amount as a grant from the AfDB, Mangudya said.

The country’s foreign debt stands at $8.3 billion, of which $1.8 billion is balances.

The South African country is struggling to emerge from years of international isolation, largely blamed on Mugabe’s policies, including the confiscation of farms from white farmers.

Zimbabwe is facing its worst drought since 1992, which has left 4 million people in hunger.

The drought had forced the government to lower its growth target for 2016 to below 2 percent from 2.7 percent. The IMF and World Bank forecast growth of 1.4 percent and 1.5 percent respectively, Mangudya said.

In 2015, the government had issued $250 million in treasury bills to raise money for its operations Mangudya said, adding that the central bank would soon start holding public auctions of treasury bills to enhance transparency in state borrowing.  

TRTWorld, Reuters