Zimbabwe commits to IMF advice, but rules out radical changes

Zimbabwe has re-emphasized its commitment to continue engagements with the International Monetary Fund (IMF) and to address, but not radically, issues the lender raised. Zimbabwe, which has lost its voting rights in the IMF but remains a member, has been in default to international creditor since 1999. Zimbabwe has about 125 million U.S. dollars of arrears to the fund, according to the IMF website, but its overall debt is estimated at about 6 billion dollars, about half the country's Gross Domestic Product (GDP). Finance Minister Patrick Chinamasa said on Wednesday that Zimbabwe looks forward to constructive engagements, but would not rush to reduce its bloated civil service as advised, opting to grow the economy instead. IMF teams have been in the country over the past month to work out re-engagement plans. "They are going to set up a country office here. It is testimony by the Bretton Woods institution that they are interested in a serious engagement," Chinamasa told reporters after meeting IMF officials. "We shall not have a debtor-creditor engagement. We are a debtor yes, but this debt accumulated because of sanctions." The European Union and a number of Western countries led by the United States have imposed sanctions on Zimbabwe over the ruling party's alleged human rights violations. The Zimbabwean authorities deny the charges. But the decade-old sanctions, which include a freeze on development aid and investment restrictions, have seriously upset the country's fragile economy, which had shrunk over 50 percent from 1995 to 2008. Chinamasa said the IMF had raised several issues that required urgent attention. The issues include reviewing the country's bloated 236,000-strong civil service, whose salaries chew up 70 percent of the government's annual budget, leaving little space for development. The IMF had also raised concerns about slow movement towards amendments to the Minerals Act, the Banking Act and restructuring of the diamond sector. "We cannot address the employment cost issue overnight. I have told them that I will address this in the long term by growing the economy and improving GDP. We are also addressing issues of the financial sector. We are also looking at the Banking Act to address corporate governance in the law, but that also will take some time," Chinamasa said.