The International Monetary Fund this week postponed its decision to expel Zimbabwe for up to six months, following small repayments of its debt. The IMF has once again criticized Zimbabwe's policies and the decline of social services to the increasingly poverty stricken population.
Tony Hawkins, a veteran economist, academic and financial writer, said the IMF decision to expel Zimbabwe would have serious long-term implications. He said, once a country is kicked out of the IMF, getting back in is a lengthy and difficult process.
President Robert Mugabe has said repeatedly the IMF is what he calls "a tool of Western imperialism", but his newly appointed head of the central bank, Gideon Gono, has taken a much more conciliatory tone, saying Zimbabwe needs the IMF.
Zimbabwe first defaulted on its IMF loans in 2001.
The IMF said it received repayments of $9 million in the last few months, out of the nearly $300 million Zimbabwe owes, and noted limited improvements in the government's economic policy.
But the IMF executive board expressed serious concern about the continued and sharp decline in economic and social conditions. The IMF noted Zimbabwe's decline in gross domestic product, the amount of goods and services the economy produces each year, by nearly a third over the last five years, with a further contraction of four to five percent this year.
The IMF blamed what it calls the disorderly land reform program for growing food shortages and inappropriate macroeconomic policies for the precarious state of Zimbabwe's economy.
Zimbabwe's small repayments to the IMF began after President Mugabe appointed commercial banker Gideon Gono to head up the central bank last December.
Although the IMF has noted a drop in annual inflation from its high of 600 percent last year to 450 percent, there is little cheer for ordinary Zimbabweans, who face continuing price increases of basic foods and shortages of cereals in the rural areas.
Zimbabwe, once a food exporter, is now relying on massive food imports and donor assistance to feed its population.
The IMF has given Zimbabwe six months to, "take decisive action to mend its relations with the fund and halt the social and economic decline of the country."