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Last Updated: Tuesday, 19 December 2006, 17:33 GMT
IMF warns Zimbabwe over economy
Zimbabwean children scavenging for food
Food shortages are acute.
Conditions in Zimbabwe will get worse unless the government stabilises the economic situation, the International Monetary Fund (IMF) has warned.

IMF officials, who recently spent 10 days in Zimbabwe, said conditions had deteriorated in the past year and that food and fuel shortages were "acute".

Inflation is above 1,000%, while most Zimbabweans are out of work.

The government must cut total spending while prioritising food imports and health services, the IMF said.

Stability first

The country must also improve its relations with the international community, the IMF added, to build support for much-needed reforms.

Many foreign governments blame President Robert Mugabe's policies for the country's crippling economic problems.

Without a fundamental change in policies, prospects are for a continued deterioration in the economic situation
International Monetary Fund

He, in turn, says Western countries are sabotaging the economy to remove him from power because of his land reform programme.

The IMF said the government's main aim should be to stabilise the economy as a first step to raising living standards.

But it said rampant inflation and falling economic output were increasing poverty.

"Zimbabwe's economic crisis calls for the urgent implementation of a comprehensive policy package," the IMF said in a statement.

"Without a fundamental change in policies, prospects are for a continued deterioration in the economic situation."

Safety nets

Sharp cuts in public spending were needed to help reduce inflation, the IMF said.

This should be accompanied by reform of exchange rates, liberalisation of price controls, the removal of restrictions on current account payments and the strengthening of private property rights.

At the same time, the government must provide support for the poorest in society, those affected by HIV-Aids and the government's mass clearances of slum areas, the IMF said.

Zimbabwe avoided expulsion from the IMF earlier in the year after it repaid some of its debt and pledged to clear the entire sum by December.

IMF officials will meet in March to decide on the status of Zimbabwe's debts and its membership.

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