Zimbabwe's Reserve Bank said on Monday its external debt has dropped by 2.3 percent following South Africa's contribution of $169 million last year to the International Monetary Fund.

The central bank’s annual report estimated that Zimbabwe’s total debt disbursed and outstanding, including arrears, declined from $4,071 million in 2004 to $3,978 million in December last year.

This mainly reflects resource payments on public sector medium to long-term debt, particularly to the multilateral financial institutions, the report read.

The bank said that a total of $176.3 million was paid by the South African government last year, 95.6 percent ($169-million) reduced the external payments arrears to the IMF to $144-million. The remaining $7 million were paid to other external creditors whose names were not provided.

The report also noted that the capital account improved from a deficit of $234.1 million in 2004 to a surplus of $2.7 million last year. The country, which is currently dealing with fuel shortages, has the highest ever recorded inflation rate which topped 1,204 percent in August.