HARARE – The International Monetary Fund (IMF) on Thursday said Zimbabwe's economy is expected to grow by 3.7 percent this year, the first expansion in 12 years.

The Fund, without giving reasons for its assessment, said in its latest World Economic Outlook released yesterday growth in the southern African country’s gross domestic product would accelerate to 6 percent in 2010.

The IMF forecast agrees with Finance Minister Tendai Biti’s prediction in July that the economy would grow by 3.7 percent this year as the country’s power-sharing government presses on with efforts to rebuild an economy that had suffered severe recession for the past decade.

Zimbabwe’s economy contracted 14.1 percent in 2008, according to the IMF and the Reserve Bank of Zimbabwe says the economy last posted positive growth in 1997 when it expanded by 3.0 percent.

Critics blame Zimbabwe’s economic demise over the past decade on repression and wrong policies by President Robert Mugabe, in power since the country’s 1980 independence from Britain particularly the seizure of white-owned farms for the resettlement of landless blacks.

The veteran leader denies ruining Zimbabwe and instead blames his country’s problems on sabotage by Western governments he says are out to topple him.

But the formation of a unity government by Mugabe and his political rival Morgan Tsvangirai appears to have halted the economy's free-fall, although unemployment still hovers around 85 percent and industries are operating below 35 percent capacity.

Tsvangirai has made a priority of trying to restore ties with international lenders and the IMF sent a mission to Zimbabwe just one month after he took office – the first such mission since 2006.

The fund has long criticised Mugabe's economic policies but had praise for the efforts of the new unity government.

The IMF estimates consumer inflation to average 9 percent this year and rise to an average of 12 percent in 2010. It also forecasts the country's current account deficit at 21.4 percent of GDP in 2009, narrowing to 19.9 percent next year.

Meanwhile the IMF also this week said Zimbabwe – whose government says it needs $10 billion in foreign aid to rebuild the country – is among top three countries that have been defaulting paying their arrears to the Fund. War-torn Somalia and Sudan are the other two countries cited for gross failure to regularly service their debts with the international lending institution.

"Three members remain in protracted arrears to the Fund – Somalia, Sudan, and Zimbabwe – and remedial measures are in place for all three cases. All overdue financial obligations to the Fund as of end-June 2009 were protracted arrears, with Sudan accounting for 75 percent of the total,” the IMF said in statement.

The announcement by the IMF comes at a time when the southern African country – which owes the Fund US$141 million under the Poverty Growth Reduction Facility (PGRF) – has defaulted on the US$100 000 quarterly payment Harare undertook to remit to the Fund early this year.

Biti was not available for comment but sources within his office said he was going to reassure the IMF about Zimbabwe’s repayment status at the Fund’s meeting in Turkey later this month. – ZimOnline