ZIMBABWE has requested the International Monetary Fund (IMF) to roll out a successor plan to the current supervised economic reform programme, the global lender has said.
In June last year, IMF agreed on a staff-monitored programme (SMP) on Zimbabwe with the country setting itself some benchmarks that have to be attained during the tenure of the economic plan.
The SMP — an informal agreement between country authorities and the Fund staff to monitor the implementation of the authorities’ economic programmes — came after intensive lobbying by the inclusive government as part of its re-engagement with the global lender.
The SMP focusses on putting public finances on a sustainable course, while protecting infrastructure investment and priority social spending, strengthening public financial management, increasing diamond revenue transparency, reducing financial sector vulnerabilities, and restructuring the central bank.
In a report released on Monday, IMF said discussions of the first and second reviews under the SMP were nearing conclusion.
“The Zimbabwean authorities have indicated interest in a successor SMP to build on their achievements and to support a stronger policy framework,” IMF said.
The SMP was supposed to run up to December last year but was extended as the country lost time during last year’s harmonised elections and the uncertainty that ensued.
IMF said the economic reform plan provided a useful anchor for Zimbabwe in a difficult election year.
“However, progress in implementing the SMP approved by Fund management in June 2013 and extended through June 2014 has been mixed, reflecting in part a long electoral process and a protracted post-election transition,” it said.
The request for SMP’s successor comes as the economy has shown signs of distress with the World Bank saying the economy would grow by 2% this year. Government projects the economy to grow by 6,1%.
Revenue generated is being chewed by recurrent expenditure, notably salaries and wages, leaving little for capital expenditure like infrastructure projects.
Liquidity challenges have shown no signs of abetting while non-performing loans are on the increase.
IMF recommended continued vigilance in monitoring weak banks and a proactive approach to ensure an orderly resolution of insolvent non-systemic banks.
“They [IMF directors] noted that restructuring and recapitalising the Reserve Bank of Zimbabwe would help mitigate vulnerabilities,” IMF said.
Under the SMP, Zimbabwe said it would issue a Statutory Instrument by the end of June 2013 that would establish a clear formula for the calculation and remittance of any dividends to government from those entities it holds shares in.
“This is an important step towards ensuring that all diamond revenue is remitted to Treasury, in keeping with the government’s commitment under the Diamond Policy. In addition, all rough diamonds produced shall be sold through a government-appointed agent,” Zimbabwe said in a letter to the IMF managing director, Christine Lagarde.
The timeline has been missed.
Last year, the government also told IMF it would submit a Bill before Parliament by the end of September meant to take over the debt owed by the Reserve Bank of Zimbabwe (RBZ).
The central bank owes creditors over $1,1 billion.
That timeline was also missed although a Bill, the Reserve Bank of Zimbabwe (Debt Assumption) Bill, was recently gazetted and would be presented when Parliament resumes sitting next month.