THE EXECUTIVE board of the International Monetary Fund last night decided to defer a decision on whether to expel Zimbabwe from the organisation to its board of governors, giving the pariah African state a respite of up to six months.

In a statement late last night, the IMF said: “This decision provides Zimbabwe with a further opportunity to strengthen its co-operation with the IMF in terms of economic policies and payments.”

However, the IMF noted that initial measures by Zimbabwe in the area of exchange rate and monetary policies had fallen “well short” of the level required to address Zimbabwe’s economic difficulties.

It also gave warning of a significant risk that unless strong macroeconomic policies were undertaken without delay, economic and social conditions could deteriorate further.

The executive board also said it was critical to provide adequate social safety nets and food security for vulnerable groups, including those affected by HIV/AIDS.

The development came after senior officials from Zimbabwe held eleventh-hour talks in Washington to try to prevent their country being expelled from the IMF.

Gideon Gono, the head of Zimbabwe’s central bank, held meetings with Tom Scholar, Britain’s representative director on the IMF’s executive board, and with Abdoulaye Bio Tchane, head of the Fund’s Africa department.

The last-ditch attempt by Zimbabwe to secure some support in Washington came as the IMF board met last night to discuss the African country’s ejection from the institution over $174 million (£95 million) in arrears on loans made to it.

The renegade Government of President Mugabe made a surprise gesture last week to avoid explusion when it coughed up $120 million owed to the IMF. However, the country’s officials believe that it will need to hand over a further $50 million to avoid being expelled. Mr Gono was denying reports that the $120 million already repaid had been raised from undeclared foreign exchange holdings. He added that “for anyone to suggest that we either raided exporters’ (deposits) or raided any other depositors’ facilities . . . is scandalous to say the least”.

If Zimbabwe were expelled, it would become only the second nation to be thrown out of the IMF since its creation after the Second World War. The first was Czechoslovakia, which was expelled in 1954. It was failing to comply with various IMF membership requirements.

The IMF’s governors are finance ministers from around the world, headed by Gordon Brown.

Zimbabwe’s expulsion from the IMF would underline its growing isolation from the international community and rapidly deteriorating economic conditions.

The Zimbabwean economy has shrunk by 30 per cent over the past five years, since the Government began to seize white-owned commercial farms and agricultural prices plummeted.

Mr Mugabe’s regime has tried to blame drought and the sanctions imposed on his country by the US and the EU.

Explore Economics

• Pre-Budget Report 2008

• Budget 2009

• World Economic Forum

• The Times MPC

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive