IMF explains why it did not provide debt relief to Zimbabwe

The International Monetary Fund could not provide any debt relief to Zimbabwe under the Catastrophe Containment and Relief Trust because Zimbabwe does not owe any debt to the IMF and was therefore not eligible.

This was said yesterday by IMF director of Communications, Gerry Rice, during a press briefing after he had been asked why Zimbabwe has not benefitted from the debt relief when the country had written to the IMF asking for assistance.

Zimbabwe Finance Minister Mthuli Ncube wrote to the IMF and other international creditors on 2 April that the country was headed for a health and economic catastrophe from the coronavirus pandemic because its debt arrears mean it cannot access foreign loans.

The IMF provided debt relief totaling $500 million to 25 countries three weeks ago.

“What I can say is the IMF’s CCRT is designed to provide debt relief only to countries who have debts owing and upcoming repayments to the IMF.  So, that initiative is not applicable to Zimbabwe because it doesn’t owe any debt to the IMF. So, that’s why it’s not eligible for the CCRT,” Rice said.

“It doesn’t owe the IMF any debt. In fact, Zimbabwe is in good standing with the IMF.  It has, as I’ve said here before, repaid arrears outstanding to the IMF.

“To become eligible for further financial support from the IMF, Zimbabwe would need to close — clear its arrears with other financial institutions, as well as reach an understanding with its bilateral creditors over clearance of arrears to them, and beyond the issue of arrears, consideration of any future request would require Zimbabwe to be ready to implement strong macro policies and structural reforms.  So, there are a set of issues there.

“The bottom line is we are in discussions with Zimbabwe. We are engaged in the policy dialogue with Zimbabwe. We do recognize the dire circumstances facing the people of Zimbabwe, and we’re providing technical assistance right now, and our active engagement is ongoing.”

One of the institutions Ncube wrote to, the Word Bank, has, however, has promised US$7 million to Zimbabwe to fight the coronavirus pandemic.

A World Bank spokesman said that while Zimbabwe could not access regular financing, it could get money from its trust funds to fight the coronavirus that has slowed down the global economy.

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