On June 6 2003, the International Monetary Fund suspended Zimbabwe’s voting and other related rights, ostensibly because Zimbabwe ‘had not sufficiently strengthened its co-operation with the IMF in areas of policy implementation and payments’ including the devaluation of the Zimbabwe dollar, writes Dr Felix Muchemwa in his book The Struggle for Land in Zimbabwe (1890-2010) that The Patriot is serialising.
The International Monetary Fund
IN September 1999, the International Monetary Fund (IMF) suddenly suspended its balance of payment support to Zimbabwe which was under a ‘stand-by arrangement’ and had been approved only the previous month in August 1999, purportedly for the Economic Structural Adjustment Programme (ESAP).
The IMF also suspended all technical assistance to Zimbabwe and adopted a declaration of non-co-operation with Zimbabwe.
The country was also removed from the list of countries eligible to borrow under the IMF’s Poverty Reduction and Growth facility. (Financial Gazette December 19-26, 2002 p.S7)
By December 21 2001, the American ZDERA Section 4C and 4D were fully operational, prohibiting the IMF from doing any financial transactions with Zimbabwe. (ZDERA, Section 4C and 4D, 2001)
In early September 2002, the IMF executive board approved a proposal to withdraw Zimbabwe’s voting and other rights, and immediately initiated the process.
The World Bank was expected to impose similar sanctions in striking out Zimbabwe from its membership. (Financial Gazette September 19-25 2002 p.S7)
While the given reason was that Zimbabwe had failed to repay US$137 million and was in arrears, the truth of the matter was that the institutions were acting under Section 4C(2) of ZDERA which directed: ‘The Secretary of the Treasury to instruct the United States Executive Director to each International Financial Institution to oppose and vote against any cancellation or reduction of indebtedness owed by the Government of Zimbabwe to the United States or any International Financial Institution’. (ZDERA December 21 2001).
On June 6 2003, the IMF, therefore, suspended Zimbabwe’s voting and other related rights, ostensibly because Zimbabwe ‘had not sufficiently strengthened its co-operation with the IMF in areas of policy implementation and payments’ including the devaluation of the Zimbabwe dollar.
In December 2003, the IMF went further and initiated the procedure for the compulsory expulsion of Zimbabwe from the IMF.
The compulsory expulsion from the IMF was, of course, the last strongest measure the Bank could carry against Zimbabwe as a penalty for compulsory acquisition of land from the white settler-farmers. (Gono p.3)
However, this was later rescinded on February 16 2005, provided Zimbabwe showed willingness to improve its economic policies, in particular, stopping the compulsory land acquisition, making regular payments to IMF and of course devaluing the Zimbabwe dollar.
Then, despite immense difficulties of foreign currency shortages, Zimbabwe was forced to clear its US$210 million in arrears to the IMF under the GRA account in 2005, after being assured by the IMF staff that such clearance was going to lead to the restoration of voting rights, access to technical assistance and international finance. (Gono 2007)
But, that was not to be, since despite the payment and clearance of the GRA account, the IMF board still took directions from ZDERA and upheld the financial sanctions imposed on Zimbabwe for compulsorily acquiring land for the resettlement of poor and landless African peasants. (ZDERA, 2001)
The World Bank
By the end of 1999, the IMF and World Bank had stopped, without warning, all funding to Zimbabwe. (RBZ Monetary Review, 2007 p.R23)
In the process, the Zimbabwe Government had not only lost its balance of payment support from the World Bank, but also lost all access to loans amounting to over US$100 million from the World Bank.
Thus, the World Bank had effectively imposed financial sanctions by suspending grants and infrastructural development funds to both the Zimbabwe Government and the private sector. (Gono p.3)
The International Development Bank (IDB)
By October 1999, the IDB had suspended all Economic Structural Adjustment Programmes aid to the Government of Zimbabwe.
By May 2000, the Bank had suspended all other new lendings to the Government of Zimbabwe. (ZDERA p.2).
By September 2000, the Bank had proceeded to suspend the disbursements of funds for ongoing projects under previously approved loans, credits and guarantees to Zimbabwe. (ZDERA p.2)
African Development Bank (AFDB)
As if the measures taken against Zimbabwe by the IMF, the World Bank and the IDB to cripple Zimbabwe’s economy were not enough, the AFDB imposed financial sanctions on Zimbabwe in May 2000, and finally stopped all lending operations to Zimbabwe. (Gono p.3)
These multi-lateral Banks also suspended their technical assistance to Zimbabwe.