Journal Issue

Statement by the IMF Staff Representative

International Monetary Fund
Published Date:
June 2002
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December 14, 2001

This buff contains information that has become available since the staff report (SM/01/356; 11/30/01) was issued. Recent information does not modify the thrust of the staff appraisal.

Recent economic developments

  • The parallel market exchange rate was trading at Z$300-350 per U.S. dollar in early December, depreciating from recent levels as low as Z$200 per U.S. dollar.

  • After allowing nominal treasury bill yields to rise to about 25 percent in late November, the Reserve Bank of Zimbabwe has rejected all bids in recent treasury bill auctions that could have led to further rises in interest rates. Reserve money increased 138 percent in November 2000 from 12 months earlier, similar to the 135 percent rise in October.

  • Privatization proceeds in 2001 are now expected to be Z$7-8 billion compared with Z$22 billion in the original budget and Z$10 billion in the supplementary budget.

Land reform

  • The government has proposed to broaden the land acquisition program by limiting the maximum size of commercial farms to 250-2000 hectares, depending on the type and location of the property. Commercial farmers will be required to comply through subdivision by February 2002 or earlier. There are currently no limits on farm size.

  • As part of the Abuja agreement, a UNDP team visited Zimbabwe for three weeks to assess the government’s land reform program. The UNDP is preparing a report setting out proposals for a land reform program that could be acceptable to the Zimbabwean government and to the international community.

  • On December 4, the recently reconstituted Supreme Court ruled that acquisitions of land by the government were lawful. This ruling followed the Supreme Court’s December 2000 ruling ordering the government to develop a workable land reform program, to restore law and order in the commercial farms areas, and to remove or legalize illegal occupants of farms.

Political and other developments

  • The government recently approved the UN’s Humanitarian Assistance and Recovery Program for Zimbabwe, which is being considered as a basis for donor support. The World Food Programme is discussing with the government distribution mechanisms for a major food relief package.

  • The Southern African Development Community, led by South African President Mbeki, is increasing pressure on Zimbabwe, reflecting concern that the deteriorating economic and political situation in Zimbabwe is increasingly spilling over to other countries in the region. Following a recent visit from SADC ministers, President Mugabe reportedly said that foreign observers will be allowed at the upcoming presidential election, reversing an earlier announcement prohibiting foreign observers.

  • According to press reports, the presidential election will be held in March 2002, and the government will no longer allow NGOs to provide voter education. On December 3, the Zimbabwe High Court ordered the government to relax new voter registration requirements that would have made it difficult for many urban voters to register.

  • The government has recently introduced a law that would effectively prohibit foreign journalists, requiring that correspondents for foreign media be Zimbabwean citizens.

  • The European Union is reportedly considering “smart sanctions” targeted at travel by, and assets of, key ZANU-PF leaders and their families, following the EU’s decision to invoke Article 96 of the Cotonou Agreement in October. On December 11, the U.S. Congress passed the Zimbabwe Democracy and Recovery Act of 2001 restricting U.S. funding to Zimbabwe until the rule of law and democracy is restored.

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