World Bank willing to aid Zimbabwe only if there is democracy

World Bank President Robert Zoellick told reporters Zimbabwe’s new finance minister, Tendai Biti, would attend the the Spring meetings of the bank and the International Monetary Fund next week.

"One, we would certainly like to (assist Zimbabwe). We had early missions with the African Development Bank to try and better understand the economic challenges in Zimbabwe," said Zoellick.

"At the Spring meetings next week, the new Zimbabwe minister of finance, he will be coming and meeting with colleagues to review the overall situation. Part of it would have to develop the economic reform plan that can get the support of donors."

Zimbabwe’s economy is in ruins with unemployment at around 90 percent and millions in need of food aid. After years of hyperinflation, prices are falling after the government allowed the use of hard currency and abandoned the Zimbabwe dollar.

Zimbabwe defaulted on its foreign debt, and policy differences with President Robert Mugabe’s government, including the often violent seizure of white-owned farms for the resettlement of landless blacks, forced the IMF and foreign donors to withhold vital aid.

Action by the World Bank could provide a major boost to help Zimbabwe restore its economy.

Zoellick earlier announced a $1.2 billion debt buyback program for Liberia that has allowed the West African nation to cut its foreign debt to $1.7 billion, a major step toward normalizing relations with the investment community. 

The debt that Liberia bought back had been in default since the mid-1980s.

The IMF suspended Zimbabwe’s voting rights in June 2003. The formation early this year of a new unity government with political rival Morgan Tsvangirai has raised cautious hope of a change in the collapsed economy’s fortunes.

Zoellick said any initiatives to help Zimbabwe depended on the success of the new unity government.

"What we hope to see will be continued progress on that front … to take the country that has great natural wealth and opportunity forward. The people have suffered," he said, adding the World Bank would work with Zimbabwe’s neighbors, including South Africa.

At the end of February, Zimbabwe owed the IMF $89 million, while the country’s arrears with the World Bank totaled $600 million. The African Development Bank was owed $429 million as of the end of June last year.

The Zimbabwe government has blamed the economy’s collapse on targeted sanctions against Mugabe’s inner circle, imposed by the European Union and countries such as the United States, in protest against violations of human rights, the rule of law and property rights.

The South African Development Community and some countries including regional giant South Africa have called for the lifting of the targeted sanctions. The United States said last month it was not ready to lift the punitive measures.

"I think it’s the decision of individual countries about what steps have to be taken to restore human rights and the democratic process," said Zoellick, in response to a question whether the World Bank supported calls to lift the sanctions.

"Zimbabwe is at a very sensitive point and we want it succeed. But that is going to require steps by all of the members of the Zimbabwe’s institutions to restore democracy, restore human rights."