African Development Bank Head Says Zimbabwe Can't Afford Chaos, Uncertainty

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Zimbabwe cannot afford another period of chaos and uncertainty, the head of the African Development Bank, Donald Kaberuka, warned on Sunday, just days before the country goes to the polls.

Zimbabwe cannot afford another period of chaos and uncertainty, the head of the African Development Bank, Donald Kaberuka, warned on Sunday, just days before the country goes to the polls.

Kaberuka said in an interview with Reuters that he hoped Wednesday's election would be considered credible by Zimbabwean voters and neighboring countries so the economy can continue its recovery since the last election in 2008 was marred by violence.

"The last thing Zimbabwe wants is another period of chaos and uncertainty and investors sitting on the fence," said Kaberuka, a former finance minister of Rwanda.

"They should build on the progress they have made over the last few years by an election seen to be fair and transparent. This is what they need," said Kaberuka, who was in Washington to receive awards from the U.S. Treasury for development projects funded by the Bank.

After more than a decade of economic decline, mismanagement, food shortages and hyperinflation of more than 500 billion percent, blamed on the policies of President Robert Mugabe, Zimbabwe's economy has started to recover in recent years.

Mugabe's 33-year hold on power is being challenged by opposition leader Morgan Tsvangirai, 61, with whom he was forced into a unity government after the 2008 election violence.

For years Mugabe, 89, and members of his ZANU-PF party have been restricted by Western sanctions. The United States has said it would be willing to consider easing the sanctions if this election is seen as free, peaceful and transparent.

However, Tsvangirai, who is making a third run for the presidency, has questioned what he called chaotic preparations for the elections and warned that the credibility of the vote is at risk. Mugabe dismissed his opponent's charges of vote rigging as unfounded complaints of a "political cry baby".

Finance Minister Tendai Biti has also cautioned that any disputes over the election would undermine the economic recovery. Last week Biti, a senior member of Tsvangirai's Movement for Democratic Change party, cut his 2013 economic growth forecast to 3.4 percent from a previous projection of 5 percent this year, compared to 4.6 percent in 2012.

Kaberuka said a credible election would spur business confidence and investment at a time when many African countries are booming from increased investor interest and average growth rates of 6 percent and higher.

Zimbabwe would also become eligible for debt relief from international financial institutions, including the International Monetary Fund and the World Bank, he said.

STANDING BY FOR EGYPT

Kaberuka also cautioned that the economic situation in Egypt was worsening amid the political turmoil that killed 72 people in demonstrations on Saturday.

Kaberuka, whose institution has supported the Egyptian economy with funding, said that any new lending would have to wait until Egypt had sealed an agreement with the IMF on macro-economic issues.

"New lending is constrained by the lack of an agreement with the Fund, which I think is very much needed," said Kaberuka, whose institution is temporarily headquartered in Tunisia. "We are on standby."

The development bank pledged $500 million to Egypt last year to deal with its budget crunch.

Kaberuka said an agreement with the IMF and development banks would boost investor confidence, and help Egypt with deep-seated issues such as wasteful energy subsidies to the rich that are draining precious currency reserves.

After several attempts, the IMF failed to clinch a final $4.8 billion deal with Egypt's former government of Mohamed Mursi, who was ousted by the military earlier this month.

IMF member countries are unlikely to authorize fresh talks with between the Fund and an interim government in Egypt that has no international status.

The new Egyptian finance minister, Ahmed Galal, has played down talk of resuming negotiations with the IMF, saying it was "only part of the solution."

The country has been struggling since investors and tourists, two vital cash streams, fled after the uprising that toppled Hosni Mubarak in 2011. The revolt gave Egypt its first democratically elected president, Mursi.

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