Zimbabwe's new unity government has welcomed Wednesday's decision by the International Monetary Fund (IMF) to lift partially a technical assistance restraint it imposed on Harare. Lifting the suspension, the IMF board said that next week it plans to review Zimbabwe's overdue financial obligations to the Poverty Reduction and Growth Facility -Exogenous Shock Facility (PRGF-ESF) Trust. The IMF also plans to help Harare in targeted areas such as tax policy and administration, payments systems, banking supervision, and central banking governance.
Political analyst George Mkwananzi told VOA that the IMF decision is a significant boost to the new unity government's rebuilding efforts.
"I want to say that we welcome such a kind of announcement from the IMF with guarded caution in the sense that obviously the people of Zimbabwe would be relieved to hear such kinds of news, because it comes with a lot of things that would improve their life," Mkwananzi said.
He said although the IMF decision should be lauded, the new unity government needs to get its act together.
"But at the same time we want to throw a word of caution to the direction of the Robert Mugabe-led government because they might start to abuse such a kind of relaxation by the IMF to mean that they are doing everything in the right way. We have seen in the past few hours the arrests of opposition political party activists, which is really not called for and not according to the spirit of inclusivity," he said.
Mkwananzi said the decision of the IMF to lift the suspension of technical assistance to Zimbabwe is a positive development for the country ahead of the government rebuilding efforts.
"It is obviously a sign of bright things to come. The IMF as you know, being the central bank of world financial transactions, it would mean that most of the countries might feel encouraged even to open up their purses towards Zimbabwe. Because the Bretton Woods institutions are actually a chief indicator that some level of confidence is developing in the government of Zimbabwe, particularly because of the presence of the opposition there," Mkwananzi said.
He said the IMF decision should serve as a warning to the new unity government to ensure its economic rebuilding efforts stay on course.
"I think this particular gesture on the part of the IMF is a clear indication that they are committed to doing something meaningful, you know, to assist Zimbabwe in its time of dire need as long as Zimbabwe meets it side of the bargain in terms of fully fulfilling the democratization process, opening up the airwaves and allowing the media to act in a flexible atmosphere…I am sure the IMF and other institutions would be encouraged to open up more and assist Zimbabwe so that very soon we might see an avalanche of aid going to the direction of Zimbabwe," he said.
Zimbabwe has so far has been unable to pay at least 133 million dollars it owes the IMF since 2001. That's when the economy collapsed, leading to the world's highest rate of inflation. In light of the severe economic crisis, the government has recently begun using foreign currencies to tame hyper-inflation, which last July soared to an all-time high of approximately 231 million percent, up from 11.2 million percent the previous month.
Unity government finance minister Tendai Biti projected last week that the inflation would fall by at least 10 percent by the end of this year as the new policy of using foreign currency is helping stabilize prices of goods and services. He adds that international financing would be crucial to reviving the economy in a country where industry has operated at less than 10 percent of capacity for years.
The new government under long-time President Robert Mugabe has been pleading for aid from the international community. The government says it needs at least $8 billion to help kick start Zimbabwe's shattered economy, rebuild collapsed infrastructure, and pull the country back from the brink.
Some political analysts believe that Zimbabwe's struggle to find new investment stems from two factors: the global financial crisis and the domestic political crisis. Observers are looking for signs of progress in power-sharing between President Mugabe and Prime Minister Morgan Tsvangirai, hoping that economic conditions will also improve.