Zimbabwe, the once relatively prosperous but now destitute southern African nation, Friday gained more time in its effort to avoid expulsion from the International Monetary Fund.
The IMF's executive board decided to give Zimbabwe another six months to improve its economic policies and repay overdue loans. In a rare personal presentation to the directors, Zimbabwe's central bank chief, Gideon Gono, pleaded for forbearance and avoidance of expulsion, an action that occurred only once when communist Czechoslovakia was forced out of the Fund in 1954. The IMFhalted lending to Zimbabwe in 1999 and initiated expulsion proceedings in 2003.
In a frantic bid to avoid expulsion, Zimbabwe earlier this month came up with $120 million, which it sent to the IMF. It still owes the lending agency $174 million.
In a statement the IMF says Zimbabwe faces a significant risk of further economic deterioration unless strong policy measures are put in place. Zimbabwe's economy will shrink again this year and the country's agriculture minister says food supplies will last only three weeks. Gasoline prices were doubled earlier this month for the second time in ten weeks. Inflation is in triple digits and the money nearly worthless. The IMF wants trade restrictions and subsidies to be lifted and government spending cut.
Zimbabwe's current economic crisis began in 2000 when long-serving President Robert Mugabe began forcing white commercial farmers off the land. Agricultural output has plummeted while the government became increasingly authoritarian, clamping down on dissent and political opposition. Many poor people were recently forced out of the capital. Much of the population is short of food and normal economic activity has halted.
It is unclear how the financially starved government secured the cash for the payment to the IMF. South Africa, whose government has been reluctant to openly break with Mr. Mugabe, has said it would provide financial help only if Zimbabwe implements IMF policy recommendations.
An IMF investigation mission was in Zimbabwe in June and another visit is likely before the end of the year.