Zimbabwe has settled its arrears with the International Monetary Fund. The announcement comes against a backdrop of an expected further fall in tobacco production. The crop had been one of the country's major generators of foreign currency.
Zimbabwe has made a final payment of $9 million to clear its debt with the IMF General Resource Account. A report carried by both the state broadcaster and the state-controlled daily newspaper The Herald says this means the country cannot be expelled from the organization.
An IMF statement confirmed the development, saying the debt payment cancels the process for compulsory withdrawal of Zimbabwe initiated in December 2003.
But the statement added Zimbabwe still has overdue obligations to the Fund's Poverty Reduction and Growth Facility amounting to $119 million.
The IMF has sent a number of missions to Zimbabwe, the most recent one earlier this year. It has made major policy recommendations, including the end of arbitrary seizures of white-owned commercial farms.
The government's sometimes-violent land reform program launched in 2000 saw white farmers losing their farms ostensibly for the settlement of landless blacks. Some of President Mugabe's allies have helped themselves to more than one farm and production has nose-dived as the new farmers lack experience and materials such as fertilizers and seed.
The IMF Executive Board says it is to review Zimbabwe's arrears to the Fund on March 8. The meeting will consider Zimbabwe's cooperation with the Fund on policies and payments, as well as the remaining sanctions and remedial measures relating to Zimbabwe's arrears.
In another report, The Herald quoted the Tobacco Industry and Marketing Board forecast of a 70 million kilogram tobacco harvest, down by four million kilograms from last year.
Before the farm seizures, agriculture was Zimbabwe's leading foreign currency earner. In 1999, 250 million kilograms of tobacco accounted for one-third of the country's foreign currency earnings.
Zimbabwe is facing its worst economic crisis since independence in 1980 characterized by hyperinflation at 613 percent, more than 70 percent unemployment and chronic shortages of fuel and basic foodstuffs.
Donor agencies and economists blame economic mismanagement and the botched land-reform exercise for the meltdown. But President Robert Mugabe blames sanctions by former colonial power Britain and its western allies for the country's problems. He charges that Zimbabwe is being punished for reclaiming land stolen by the colonialists.
Britain, the European Union, and the United States have imposed a travel ban on the president and senior ruling party and government officials, but trade ties have not been affected.