THE International Monetary Fund (IMF) says it is ready to help Zimbabwe financially once the country shows commitment to clear its arrears to multilateral and bilateral financial institutions, head of mission and assistant director Domenico Fanizza told Parliament yesterday.
BY VENERANDA LANGA
Fanizza said it was essential for Zimbabwe to improve its capacity to repay loans and implement favourable economic policies on its path to re-engagement with international financial institutions.
“Once arrears with World Bank, African Development Bank and IMF are cleared, and necessary steps towards re-engagement taken, then we can think of financial arrangements with IMF and Zimbabwe can think of requesting rescheduling of financial relations with donors through the Paris Club,” Fanizza said.
The debt to these institutions is over $1,2 billion.
The IMF boss and his team had appeared before the Parliamentary Portfolio Committee on Finance and Economic Development chaired by Mutoko South MP David Chapfika to discuss the first review under the IMF-supervised economic reform plan, the Staff-Monitored Programme (SMP).
SMP’s objectives are to look at whether policies that government has implemented in the past 12 months were consistent with what was agreed in the staff monitoring programme so as to submit a report to Washington after the review.
“That would happen only after the programme is successfully completed and once the arrears are cleared, and that is the path the Zimbabwean government has decided to take – it is a difficult path, but worthwhile because we do not believe the deep seated problems in Zimbabwe can be addressed without financial support and the international community,” Fanizza said.
He added: “We believe time has come for Zimbabwe to turn the page and gain access to financial support of the international community. It is more than 15 years since Zimbabwe has been cut off from the support. It is important to show you are willing to collaborate with creditors, showing that you now have the capacity to implement key economic reforms that would allow the country to qualify for international financial support.”
Mbire MP David Butau asked Fanizza to explain why Greece’s indebtedness was worse off than Zimbabwe at 112 billion euros and yet IMF continued to support them financially.
Fanizza said it was because Zimbabwe had debt bills of $1,2 billion and did not show any commitment towards paying or discussing the situation. He said Greece had a different situation and had paid its arrears.
Zimbabwe has a total external debt of over $9 billion and requires lines of credit to help rebuild the economy.
Fanizza said it was important to clean up the Reserve Bank of Zimbabwe balance sheet and recapitalise it in order to normalise the financial sector.
He said there was need for indigenisation policy reforms, financial sector reforms and reforms in the way to do business in order to get to a point where they could work as a partnership in addressing the structural weaknesses of implementing reforms so that the IMF can give financial support.
“We believe the driving seat is yours and you have to decide the policy reforms. The key issues that need to be tackled are the cost of doing business, the general business climate conducive to entrepreneurs, and that means improving infrastructure,” Fanizza said.