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Zimbabwe to get $500m IMF loans Zimbabwe receives boost from IMF
(about 4 hours later)
The International Monetary Fund is making loans available to Zimbabwe for the first time in a decade, the BBC has learnt. The International Monetary Fund is giving Zimbabwe $400m to boost its foreign currency reserves.
The $500m (£305m) will be used to replenish Zimbabwe's dwindling foreign currency reserves. However, a further $100m will be kept in a special account and Zimbabwe's government will not have access to it until it has cleared $1bn in debts.
The money has been released on the condition that Zimbabwe's finance minister ensures the money is not diverted to other projects. Zimbabwe is in dire need of cash to rebuild its battered economy.
Zimbabwe is in dire need of aid to rebuild its battered economy. BBC Southern Africa correspondent Karen Allen says Zimbabwe's financial crisis has been partially blamed on mismanagement of central bank funds.
The way in which the deal has been received is exposing further divisions in the fragile unity government. Zimbabwe owes money to the IMF and other international creditors.
The former opposition MDC has been criticised by President Robert Mugabe's Zanu-PF party for not doing enough to secure donor funding for the country. The IMF said it made a deposit of 262m Special Drawing Rights ($409m), the IMF's own unit of currency, to Zimbabwe's account with the IMF.
In turn, the MDC has accused Zanu-PF of continued human rights abuses. It said there would be no conditions attached to this allocation of funds.
Signal However, it said 66m SDRs ($103m) would be held in an escrow account until its arrears had been cleared.
The loans send a clear signal that unlike claims made by the central bank Governor Gideon Gono that the Zimbabwean dollar will soon be restored, the US dollar will remain the official currency. The funding is part of an agreement reached at the G20 summit in London in April, which pledged to strengthen the IMF's reserves by $250bn.
According to Zimbabwe's state newspaper The Herald, Mr Gono has invited Finance Minister Tendi Biti - a member of the former opposition MDC - to discuss how the funds will be used. All 186 members of the IMF will receive funding in relation to their IMF quota or voting rights, a spokesman said.
But sources have told the BBC that the IMF only released the money on condition that Zimbabwe's finance minister ensures the money is used to replenish foreign exchange reserves and not used for other projects. The original version of this story contained inaccuracies about the exact nature of the IMF's assistance which have now been corrected.
Zimbabwe's financial woes in the past have been partially blamed on gross mismanagement of its central bank funds.