Harare — Love it or hate it, the International Monetary Fund is important in the modern world, not so much because of what it does itself, but because of its influence.

If the IMF gives a country the thumbs-up, then donors, other banks and most businesses will take this as a good "banker's reference" and will take a serious look at what sort of business they can do.

On the other hand, if the IMF gives the thumbs- down, then even if it is wrong, or if it has not investigated fully, very few in the global financial markets will want to know that country.

That was the position that Zimbabwe was in.

Now this is changing.

The IMF has now done a U-turn and said that the inclusive Government has taken encouraging and positive steps that need to be supported.

And whatever else this is, it is a major U-turn, despite the fact that the IMF wishes to limit its support at present to "technical assistance".

It gives an imprimatur to Zimbabwe's new economy, the one that emerged out of the crash of the Zimbabwe dollar and the advent of dollarisation.

Generally, the economic switch was positive.

It ended hyperinflation overnight, and in fact has introduced double-digit deflation instead as everyone learns how to cost correctly and trim margins in a competitive environment.

It has removed the possibility of quasi-fiscal operations, something that is often condemned in others although not when you do it yourself. But Zimbabwe has recognised that quasi-fiscal operations were an emergency procedure that kept the country and its economy going in the face of ruinous economic sanctions designed to foment State collapse.

Fortunately, the economy was ready to firm, thanks to measures taken by the central bank last year to licence ever more foreign currency businesses.

But one serious and sad result of the currency crash and the switch to the hard-currency economy was the near total destruction of the pool of national savings.

And this is why Zimbabwe now needs help.

It is critical that the productive and export sectors grow fast if the country is going to continue to climb rapidly from the worst days of December last year and January this year.

This, in turn, means that these sectors need access to working capital, loans and credits, and such assistance will at the beginning have to largely come from outside Zimbabwe.

This is not to say that Zimbabwe will not survive or even grow its economy without outside help. But the revival will be far slower and take far longer than if the productive sectors can operate in a more normal business environment.

In the same way social services, especially health and education, will be revived far more quickly if donors can chip in for a while until the productive sector is generating enough taxes for Zimbabwe to fund them properly.

Here loans are less useful, since these are expenses and, economically, can be regarded as long-term investments at best.

But again the IMF imprimatur is useful since donors now have a reasonable assurance that Zimbabwe will be able to both cost and account for donor support in these sectors, something difficult to do in the midst of high hyperinflation.

We believe that Zimbabwe should, in fact, be very wary about borrowing for non-productive purposes since loans have to be paid back; obviously wisely-used loans in the productive sector will generate sufficient profits to pay them back, but it is difficult to see how better hospitals can be expected to generate profits since one criterion for "better" is affordability.

The IMF U-turn is also strongly suggestive that both the US and Britain have backed off on their hardline stances. Ensuring that Zimbabwe was in the bad books of international finance organisations was a hidden but most destructive sanction, far more damaging than the much-trumpeted travel sanctions.