HomeNewsEliminate ghost workers — IMF

Eliminate ghost workers — IMF


The International Monetary Fund (IMF) has extolled government for chalking critical reforms that have “improved” corporate governance at the Reserve Bank of Zimbabwe (RBZ), but urged it to urgently eliminate ghost workers to decongest the fiscus and release funds for infrastructure spending.

In a statement released on Monday, the IMF head of mission to Zimbabwe Vitaliy Kramarenko also noted that risks in the country’s banking system had “eased” since the beginning of the year following “strict supervisory vigilance” and “early intervention” in containing solvency and liquidity risks in the industry.

“The budget is projected to generate a cash surplus in 2010, governance at the Reserve Bank of Zimbabwe is improving, and the government is working toward strengthening the business climate,” Kramarenko said.

“Risks in the banking system have eased since early 2010. Strict supervisory vigilance and early intervention in case of non-compliance with prudential rules remain the authorities’ only tools to contain solvency and liquidity risks in the system.”

The IMF technical team was in the country from October 25 to November 3 to discuss recent economic developments and the economic outlook and policies.

The multilateral lender noted that the recent restructuring and planned down-sizing of the RBZ had boosted accountability, and urged relevant authorities to resolve the outstanding issue of central bank liabilities.

It also observed that the RBZ’s insistence on minimum capital requirements and the adoption of the Basel II Accord had strengthened risk management.

“In that context, strengthened liquidity requirements would make the banking system more resilient to shocks,” said the IMF.

“In the interest of financial stability, banks’ statutory reserves should be given preferred status in the resolution of RBZ liabilities.”

Government early this year amended the RBZ Act to correct corporate governance and internal financial controls through a set of reforms that saw a new board being appointed in March and the bank systematically reverting to core business.

The Treasury-led reforms will also see a monetary policy committee being established for the first time in the history of the bank.

The IMF asserted that Zimbabwe’s growth potential would be fully “unlocked” through further structural reforms aimed to reduce labour market rigidities, establish security of land tenure, addressing diamond sector governance concerns and finalising the sticking indigenisation equity issue.

The financial institution also urged government to tackle its external debt distress by improving data reporting and furthering macroeconomic policy reforms as key preconditions for the envisaged World Bank/IMF’s staff monitored programme, still embryonic.

Packaged as a hybrid debt management vehicle of the twin Breton Woods institutions, the staff monitored programme is seen as a “stepping stone to IMF lending and debt relief”.

The IMF predicted that Zimbabwe’s 2011 National Budget “will be broadly balanced”, basing its assertion on the global commodity rally, which is projected to sustain its bull-run into next year.

The financial institution also urged government to convert part of its banked mineral earnings into international reserves to cushion itself against global market shocks that may waylay the commodity-based economy.

“As commodity prices are high at present, transforming part of the accumulated government deposits in the domestic banking system into international reserves would create a cushion against future possible shocks.”

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