HARARE, Feb. 2 (Xinhua) -- The International Monetary Fund (IMF) said Friday it will only start lending to Zimbabwe once it clears its arrears to other multilateral creditors which include the World Bank and the African Development Bank.
It however, called for concerted international effort coupled with robust local economic reforms to revive and re-integrate Zimbabwe into the global economy.
While noting that the IMF and Zimbabwe's ties had been evolving in a positive way for some months now, the multilateral creditor insisted that Zimbabwe will need to clear its debt to other international financiers first before it can resume lending.
"We have normalized our relationship in terms of their arrears to the IMF, but they still have a significant debt overhang problem with other international financial institutions and other official creditors.
"So it's an issue that has to be addressed. There has to be an arrears clearance process and a clear strategy for clearing those arrears with other creditors and that also has to be factored in to their ability, their sustainability over time," said William Murray, an official with the IMF communications department.
Zimbabwe owes the World Bank 1.15 billion U.S. dollars, 601 million dollars to the African Development Bank and over 3 billion dollars the Paris Club, among other creditors.
The debt ridden country in 2016 cleared its 108 million U.S. dollars arrears to the IMF. It has not been receiving concessionary loans from the multilateral financial institution since 2001 when it started defaulting.
Murray said Zimbabwe's economy faces severe challenges including an unsustainable fiscal deficit which has led to severe liquidity shortages, created inflationary pressures, and threatened the viability of the financial sector and Zimbabwe's exchange rate regime.
The Zimbabwean economy has suffered years of international isolation after the West imposed sanctions on the country at the turn of the millennium.
But with the advent of a new administration led by President Emerson Mnangagwa, Zimbabwe has begun taking steps to re-integrate with the global community.
Last month, President Mnangagwa became the first President from Zimbabwe to attend the World Economic Forum in Davos, Switzerland where he met several global business leaders including IMF managing director Christine Lagarde.
Murray said restoring growth in Zimbabwe will require concerted efforts to tackle the fiscal deficit including through rationalizing and better targeting the expense of agricultural support programs.
These efforts should be complemented by structural reforms to strengthen the role of the private sector by improving the business climate and reducing policy uncertainty, he said.