A row is brewing in Washington this week over the IMF’s failure to restore voting rights to Zimbabwe, despite the country having fully settled its arrears to the fund’s general resources account (GRA) 18 months ago. “It’s a clear case of the Fund cheating a member”, a senior executive board member told Emerging Markets. “The Zimbabweans made [the repayment] happen, but the IMF did not respond.”
Heat is being generated by the perception that the Fund is interpreting its rules selectively, and to reflect the foreign policy concerns of rich nations. In 2001, the IMF declared Zimbabwe ineligible for borrowing due to its overdue financial obligations, and initiated compulsory withdrawal procedures against the nation in December 2003.
But in February 2006, the country cleared its $210 million debt to the GRA. A month later, the executive board decided not to revoke the sanctions, despite the relevant managing director having withdrawn his complaint (a procedure which would normally trigger restoration of rights).
An IMF spokesman said Zimbabwe had failed to repay a separate $190 million debt to the Poverty Reduction and Growth Facility-Exogenous Shocks Facility Trust. “That is final and this is how the IMF is run”, the spokesman added.
But arrears to this trust should not automatically result in sanctions, if a country shows its commitment to repay, according to the IMF’s charter. Zimbabwe settled its arrears to the GRA, on the understanding that its access to international finance as well as voting rights would be restored. Officials from non-OECD countries are angered that this approach was scrapped.
Zimbabwe’s finance minister, Samuel Mumbengegwi, told Emerging Markets: “In order to restore our voting rights, we need to have 85% of the votes in the board but the US has about 17%. With the US using their voting powers to block normal procedures, it is an attack on democracy.”
“This was a deliberate attempt by the British and American governments to bring about political change in Zimbabwe,” he told Emerging Markets.
Abdoulaye Bio-Tchane, head of the IMF’s Africa department, said at a press briefing on Friday that staff had recommended the restoration of Zimbabwe’s voting rights but the executive board had decided against doing so, “so we’ll just take note of that”. He said that the “most important” thing is that Zimbabwe “deserves better than it is having” with current government policies.