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IMF: Zimbabwe won't get money without new policies, settling debt

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  • Zimbabwe hoped good IMF report would help to gain support from other donors
  • Prime minister says the country needs about $5 billion to kick-start the economy
  • Economic commentator says he sees little hope of getting IMF funding
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HARARE, Zimbabwe (CNN) -- Zimbabwe will get no financial assistance from the International Monetary Fund until it moves ahead with sound policies and settles its outstanding debt, the IMF said Wednesday.

PM Morgan Tsvangirai, left, and President Robert Mugabe seek funds for Zimbabwe.

PM Morgan Tsvangirai, left, and President Robert Mugabe seek funds for Zimbabwe.

The Zimbabwean government had been hoping the international financial organization would be willing to resume aid now that the country has established a coalition government and brought some stability to its economy.

But at the end of a 15-day visit to the country, an IMF team issued a statement saying "technical and financial assistance from the IMF will depend on establishing a track record of sound policy implementation, donor support, and a resolution of overdue financial obligations to official creditors, including the IMF."

It noted, however, that "IMF staff stand ready to continue to assist the authorities through policy advice."

The ability to gain support from international donors was one thing the Zimbabwean government had been hoping a good report from the IMF would facilitate.

Last month, Morgan Tsvangirai, the former opposition leader and new prime minister, said the country needs about $5 billion to kick-start the economy, of which $2 billion is required immediately.

President Robert Mugabe last Thursday pleaded for international aid as he announced the Short Term Emergency Recovery Plan, which his finance minister said would attempt to persuade businesses to gear up, increasing factory utilization to levels above 60 percent.

He also appealed to the European Union and the United States to remove targeted sanctions imposed against him and his close associates in response to his policies, including his policy of taking farms from white commercial owners.

Mugabe recently said that he planned to continue that policy, which has been in effect since 2000. Many analysts blame the policy for the country's food shortages and economic meltdown because the land was given to inexperienced farmers whose prime qualification was being loyal to Mugabe's ZANU-PF party.

Zimbabwe's economic crisis has stretched for months. Its inflation rate became the highest in the world last year, fueled by acute shortages of all essentials, including food, fuel and electricity. The IMF report added that "the Reserve Bank of Zimbabwe's (RBZ) quasi-fiscal activities" also were a factor behind the hyperinflation that brought down the nation's economy.

That inflation has been under control since the country abandoned its worthless legal tender earlier this year and began using the U.S. dollar, the British pound and the South African rand. The IMF report noted that move had strengthened Zimbabwe's position.

But further steps are needed, it said.

The IMF team noted that the humanitarian situation in the country suffered "significant deterioration" last year, in part as a result of "the steep decline in economic activity and public services."

"Poverty and unemployment have risen sharply," it said.

Estimates earlier this month put the unemployment rate at 94 percent, and the United Nations said more than half the population was facing starvation.

A cholera outbreak that began in August has claimed more than 4,000 lives, according to the World Health Organization, which said Monday that although there has been a decrease in the number of cases and deaths over the past two months, there remains a chance of the outbreak restarting.

At the start of the IMF team's visit, the organization said its report would probably be discussed by the IMF's executive board in early May.

Private Zimbabwean economic commentator John Robertson said at that time that he saw little hope of the nation getting IMF funding.

"As long as we do not change our policies, no cent will come from the IMF -- even if they are to come here every day," he said. "No institute would pour funding where there is no rule of law or a sound economic policy."

All About Robert MugabeZimbabweInternational Monetary Fund

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