The International Monetary Fund has told Zimbabwe that it will not provide the country with more funds until its existing $1bn debts are settled.

Zimbabwe's government estimates it will need $10bn (£6bn) of foreign aid to help rebuild its battered economy.

But the IMF said that Zimbabwe would need to clear its debts and show a sustained record of sound policies before it could give financing.

IMF however confirmed that Zimbabwe’s economy may be recovering after a decade of recession.

“A nascent economic recovery appears to be underway,” Vitaliy Kramarenko, the IMF Mission Chief for Zimbabwe, said today in a statement. “To sustain positive economic trends and improve living standards, reform and stabilization efforts need to be stepped up.”

Zimbabwe’s economy should expand more than 4 percent this year as the government implements fiscal and monetary changes and attracts foreign investment, Finance Minister Tendai Biti said on June 12. Biti’s Movement for Democratic Change party formed a coalition with the party of President Robert Mugabe in February in a bid to end a political impasse.

The economy has shrunk every year for the past decade, contracting 14.1 percent last year, after Mugabe’s government seized farms belonging to white commercial farmers to redistribute to black subsistence farmers. That slashed exports of crops such as tobacco and caused a famine.

By Staff reporter and agencies