“The executive board of the IMF reviewed Zimbabwe’s overdue financial obligations to the Fund and decided to initiate the procedure on the compulsory withdrawal of Zimbabwe from the IMF fter having determined that Zimbabwe had not actively cooperated with the IMF,” a statement posted on its website said.
The IMF board held a meeting in Washington Wednesday to discuss the deteriorating economic situation in the southern African country.
Its gross domestic product has declined by about 40 percent between 1999 and 2003, and inflation rose to 526 percent in October.
Zimbabwe’s Finance Minister Herbert Murerwa has forecast inflation will rise to 700 percent early next year, but some economists believe inflation is already at that level.
International agencies, including the IMF, blame Zimbabwe’s economic decline on a three-year old land reform programme of seizing white-owned land for redistribution to new black farmers.
“The adverse effects of the land reform and a drought left two-thirds of the population in need of food aid in 2002/2003, and no significant improvement is expected in the remainder of 2003/2004,” the IMF said.
Agencies like the IMF point out that the programme has slashed agricultural production, including that of tobacco, a key foreign currency earner.
Foreign currency shortages have had widespread knock-on effects. Chronic shortages of fuel, medicines and food have been the effects most felt.
Zimbabwe has also been dogged by drought and political instability. The result has been a major dip in tourist arrivals.
Figures released by the Zimbabwe Council of Tourism last month showed a reduction in foreign currency earnings from $700 million in 1999, to $70 million last year.
As a consequence, Zimbabwe has been unable to pay its debts. The IMF said Zimbabwe had been in continuous arrears since February 2001.
“As of end-November 2003, Zimbabwe’s arrears to the IMF amount to $273 million, or about 53% of its quota in the IMF,” the statement said.
There was no immediate reaction from the Zimbabwe government to the IMF’s statement, but an official with the opposition Movement for Democratic Change (MDC) described it as “inevitable”.
“It’s a tragedy for the country, but it’s inevitable,” said Eddie Cross, an economic adviser to the opposition.
He noted that the implications for Zimbabwe would not be financial because Zimbabwe was not receiving support from the IMF. Zimbabwe was declared ineligible to use IMF resources in mid-2001.
However, the latest move by the lender would “intensify the isolation of the Zimbabwe regime”, Cross said.
According to the IMF statement, of the total amount of arrears, $110 million was overdue to the Poverty Reduction and Growth Facility (PRGF) Trust.
“Zimbabwe is the first and only country to have protracted overdue obligations to the PRGF Trust,” it said.
“Executive directors urged the authorities to strengthen cooperation with the Fund and to adopt a comprehensive adjustment program that would arrest and reverse Zimbabwe’s continuing economic decline,” the statement added.
The executive board will review Zimbabwe’s overdue financial obligations to the IMG again within six months.