The International Monetary Fund (IMF) has praised Zimbabwe's performance under a policy review program, a step towards normalizing relations between the two and potentially unlocking donor money to the struggling southern African country.
Zimbabwe fell out of favor with the Bretton Woods institutes in the early 2000s. The country's voting right at IMF was suspended and the financial institution's Zimbabwe country office closed in 2004. The IMF has not been lending to Zimbabwe over a 121 million U.S. dollars debt in arrears.
The re-engagement only started in June 2013 with the IMF providing a staff-monitored program (SMP).
In a press release issued Wednesday, the multilateral financial institution said the performance was pleasing despite "some missed targets" due to a difficult election year characterized by a long electoral process and a protracted post-election transition.
"The Zimbabwean authorities' performance under the SMP has been broadly satisfactory and the authorities have taken corrective measures to ensure a track record of policy implementation going forward," the IMF said.
The IMF noted that Zimbabwean authorities had begun implementing policy measures to address the 2014 fiscal gap, improving the quality of public expenditures, enhancing financial sector stability and moving forward delayed structural reform measures.
It hinted that a successor SMP could also be agreed on as Zimbabwe had made such indications, leading to the multi-national financial institution's expectation of reopening its country office in Harare in November.
The first SMP was due to run from April to December 2013 but was extended by anoter six months in January this year following a request by Zimbabwe.
The IMF said it could launch a successor SMP to build on their achievements and support stronger policy framework.
The SMP does not entail financial assistance or endorsement by the IMF Executive Board, but represents Zimbabwe's first IMF agreement in more than a decade while its successful implementation would be an important stepping stone for Zimbabwe to re-engage with the international community.
Zimbabwe's external debt has mounted to 8.9 billion U.S. dollars by the end of 2013. Besides the IMF, Harare also owes the World Bank 1 billion U.S. dollars, the African Development Bank 612 million U.S. dollars, and the European Investment Bank 280 million U.S. dollars.
This comes as the Zimbabwean economy entered a difficult period. The IMF predicts slower growth for the Zimbabwean economy in the near future, or averagely 4 percent, which has dropped from the average 10 percent from 2009 to 2012