IMF Executive Board Relaxes Most Restrictions on Technical Assistance to Zimbabwe, Opening Way for Future Staff-Monitored Programs
HARARE, Zimbabwe, October 31, 2012/African Press Organization (APO)/ -- The Executive Board of the International Monetary Fund (IMF) has further relaxed the restrictions on IMF technical assistance to Zimbabwe that resulted from the country's protracted financial arrears to the Poverty Reduction and Growth Trust1. The decision, taken on a lapse-of-time basis2 on October 23, 2012, opens the way for Zimbabwe to agree on an economic program that would be monitored by IMF staff. Such a staff-monitored program (SMP) would mark another significant step toward normalization of Zimbabwe's relations with the IMF.
SMPs are informal agreements with IMF staff whereby staff provide advice to the authorities on the design of their economic program, and monitor the implementation of such a program. They do not entail endorsement by the IMF Executive Board nor financial assistance.
Adding to previous decisions easing restrictions on technical assistance to Zimbabwe, the Executive Board has decided to resume IMF technical assistance in certain new areas to support Zimbabwe's formulation and implementation of a comprehensive adjustment and structural reform program that can be monitored by the staff. The current and new areas for IMF technical assistance to Zimbabwe are in the fields of i) tax policy and administration; ii) public financial management and expenditure policy; iii) financial sector reform; iv) central bank reform; v) monetary and exchange policies; vi) macroeconomic statistics; vii) anti-money laundering and combating the financing of terrorism; and viii) any other area that would support the formulation and implementation of a comprehensive adjustment and reform program that can be monitored by the staff.
In taking this decision to relax restrictions on Zimbabwe to the full extent necessary to allow for an SMP, the Executive Board took into account a significant improvement in Zimbabwe's cooperation on economic policies, the authorities' efforts and renewed commitment to address its arrears problems, and Zimbabwe's severe capacity constraints in the IMF's core areas of expertise that represent a major risk to the implementation of the government's macroeconomic stabilization program.
1 Zimbabwe is the only case of protracted arrears to the Poverty Reduction and Growth Trust (PRGT), the IMF's vehicle for concessional lending to low-income countries. The remedial measures that have been required of Zimbabwe with respect to these arrears are the suspension of technical assistance (which has been progressively lifted); the removal of Zimbabwe from the list of PRGT-eligible countries (see Press Release No. 01/40); and the declaration of noncooperation (see Press Release No. 02/28).
2 The Executive Board takes decisions under its lapse of time procedure when it is agreed by the Board that a proposal can be considered without convening formal discussions.