ZIMBABWE: US $120 million keeps IMF at bay, but food crisis still looms

JOHANNESBURG, 1 Sep 2005 (IRIN) - In a surprise move cash-strapped Zimbabwe has paid off a substantial part of its arrears to the International Monetary Fund (IMF), but economists are raising questions over the government's capacity to import enough maize to feed up to 4 million people facing food shortages.

Reserve Bank Governor Gideon Gono told the official Herald newspaper that the government had paid back US $120 million of the US $295 million it owed, saying the funds had been sourced from exporters and holders of free funds.

"This is a modest payment, meant to demonstrate our sincerity with respect to our international obligations," he said. The announcement came just days before a crucial 9 September meeting of the IMF's executive board to discuss Zimbabwe's possible expulsion over outstanding debt.

Harare-based economist Denis Nikisi told IRIN that although the government may have accrued some forex from exporters, he doubted that it had been able to raise a sufficient sum internally.

"Inflows from Zimbabweans living abroad may have contributed as well but, by and large, it is unlikely that those funds, coupled with the proceeds from exporters, would have been enough to pay the IMF such a large amount," Nikisi explained.

He speculated that President Robert Mugabe's recent trade and investment visit to China may have paid off, contrary to media reports that the president had returned home largely empty-handed.

"Mugabe likely agreed to a number of tradeoffs during his visit to China in exchange for the cash. However, it remains to be seen if there is any more left over to buy food for the country," Nikisi commented.

Zimbabwean authorities have refused to appeal for international aid to stave off widespread food shortages, insisting instead that the government has the capacity to import the 1.2 million mt required to fill the food gap.

Samuel Muvhuti, chief executive officer of the Grain Marketing Board (GMB), the official purchasing agent, told IRIN on Thursday the country was bringing in grain at an average rate of 120,000 mt a month from various sources, mostly private dealers in South Africa.

"We are well connected to our suppliers in South Africa and other parts of the world - so far we have imported over 300,000 mt. More grain is still coming in," said Muvhuti.

He refused to disclose the budget allocation for grain procurement, saying the information was between the GMB and the Reserve Bank of Zimbabwe, which manages the allocation.

Murerwa freed grain trading in Zimbabwe earlier this month, announcing that the state-owned GMB would no longer enjoy a monopoly, and scrapped duties on maize and wheat imports.

[ENDS]