THE International Monetary Fund (IMF) has commended the Zimbabwe government for making great strides towards implementation of macro-economic and structural reform programmes despite the economic and financial difficulties being experienced in the country.
BY VICTORIA MTOMBA
In a statement on Tuesday, IMF said Zimbabwe had made a lot of progress in implementing the macroeconomic and structural reform programmes, particularly regarding clarifying the indigenisation policy, restoring investor confidence, improving financial sector soundness and strengthening public finance management.
“The authorities have stepped up their re-engagement with creditors, including increasing payments to the World Bank and the African Development Bank,” IMF said.
“These re-engagement steps open the way for further constructive dialogue to identify feasible options for clearing the arrears to these institutions — a key step towards seeking rescheduling of bilateral official debt under the umbrella of the Paris Club.”
The IMF said in 2015 the authorities’ policy reform agenda would continue to focus on reducing primary fiscal deficit to raise Zimbabwe’s capacity to repay, restore confidence in the financial system, improve the business climate and garner support for an arrears clearance strategy.
The organisation said the strong performance by Zimbabwe would improve its repayment capacity and demonstrate that it could implement reforms that could justify a financial arrangement which could tackle the country’s deep-rooted problems.
“Zimbabwe’s economic prospects remain difficult. Growth has slowed and is expected to weaken further in 2015. Despite the favourable impact of lower oil prices, the external position remains precarious and the country is in debt distress,” IMF said in a statement.
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“Key risks to the outlook stem largely from a further decline in global commodity prices, fiscal challenges and possible difficulties in policy implementation.
However, the authorities are committed to intensifying their efforts to ensure successful implementation of the programme and to lay the ground for stronger, more inclusive and lasting economic growth”.
IMF completed the 15-month staff monitored programme (SMP) approved in October 2014 to help build a strong track record towards normalising the relationship with Zimbabwe’s creditors and mobilising development partners’ support. The SMP is an informal agreement between country authorities and the IMF to monitor the implementation of the authorities’ economic programme but does not entail financial assistance.
SMP is aimed at strengthening Zimbabwe’s external position as a prerequisite towards arrears clearance, normalisation of debt servicing and restoring access to external financing.
This will require further fiscal consolidation to rebuild the country’s capacity to repay debts, restore financial stability and mobilise international support for resolving the external debt situation.
IMF staff have pledged to continue supporting Zimbabwe’s economic reforms and debt relief strategies.
“Staff will remain engaged with the authorities to monitor progress in the implementation of their economic programme and will continue to provide targeted technical assistance in order to support Zimbabwe’s capacity-building efforts, its adjustment and ongoing reform process,” IMF said.
