ZIMBABWE moved to within a hair’s breadth of formal expulsion from the International Monetary Fund (IMF) yesterday for reneging on its $1bn debt, its fate now resting squarely on its response to conditions SA has set for a $1bn rescue package.

Sources said Zimbabwean officials were yesterday making frantic efforts to avert expulsion from the IMF, which would further isolate Harare, worsen Zimbabwe’s already poor international credit rating and magnify its political risk.

The IMF suspended Zimbabwe’s voting rights in 2003 and started the process of compulsory withdrawal. This is the last step in a series of escalating measures which the fund applies when expelling members that fail to meet their financial obligations under the articles of agreement.

However, the expulsion will be ratified only next month by the IMF board, suggesting that the IMF wants to see if Mugabe’s bid to raise $1bn in loans from SA or China is successful.

In exchange for the life-saving loan, SA wants President Robert Mugabe’s regime to begin talks with the opposition Movement for Democratic Change (MDC), institute economic reforms to stave off meltdown, stop the controversial urban clean-up campaign, Operation Restore Order, and restore the rule of law.

A source said last night: “We don’t know the details of the diplomacy around this issue, but what we do know is that the IMF wants its money and Zimbabwe doesn’t have it.”

Zimbabwe’s expulsion also comes ahead of the publication of a damning United Nations report on Operation Restore Order, which has left more than 300000 people homeless.

A Zimbabwean delegation, led by Reserve Bank governor Gideon Gono, met Finance Minister Trevor Manuel and Reserve Bank governor Tito Mboweni last Friday to ask for a rescue package.

Mugabe is visiting China this weekend with a similar plea.

The ultimatum for Zimbabwe to pay $1bn to service its debt and arrears to the IMF was apparently delivered by Deputy President Phumzile Mlambo-Ngcuka to Mugabe during a brief visit to Harare last week.

Last night, senior Zimbabwean government official George Charamba told SABC Radio that Mugabe is seeking credit lines from SA and Asian allies.

“SA will probably be looking at helping us service our debts, our international debts, and especially with the aim to ensure that we are again in a position of creditworthiness,” Charamba said.

Zimbabwe was also exploring alternative lines of credit with Malaysia and China.

IMF spokeswoman Francis Harden said the IMF board would meet on Zimbabwe next month.

Sources said the IMF, which has now closed its Harare office, sent a letter of demand to Mugabe last week. The letter was delivered by Mlambo-Ngcuka on behalf of President Thabo Mbeki.

Sources said Mlambo-Ngcuka had told Mugabe that Mbeki would help only if Harare met certain tough conditions. Mbekihas said only a political solution will save Zimbabwe and wants the ruling Zanu (PF) to talk to the MDC. SA believes this would be the first step towards the ending of the political and economic crisis in Zimbabwe.

Harare abruptly stopped its demolition campaign, which sparked global outrage, last week after Mlambo-Ngcuka’s visit and a few days after police said they were shifting their crackdown to the country’s wealthy suburbs.

Mugabe’s ministers were said to have been anxiously trying to find a way out of the emergency.

Officials in Pretoria were also on tenterhooks, trying to finalise SA’s rescue package.

Zimbabwe’s arrears to the fund amount to $295m. The country last received money from the IMF in 1997 and has been in arrears since February 2001.

Harare committed itself last year to pay $1,5m a month to reduce its arrears, but the IMF said this was woefully inadequate to stabilise the debt.

Source: AllAfrica.Com
URL: http://allafrica.com/stories/200507210068.htm…/p>