The International Monetary Fund (IMF) says government must cut the fiscal deficit and improve the business climate as key ingredients for the restoration of economic growth.
BY BUSINESS REPORTER
In a Press briefing last week, William Murray, from the IMF’s communications department, said an unsustainable fiscal deficit has led to “severe liquidity shortages, created inflationary pressures, and threaten the viability of the financial sector and Zimbabwe’s exchange rate regime”.
He said the fiscal deficit would be contained through, among others, rationalising and better targeting the “expense of agriculture support programmes”.
“These efforts should be complemented by structural reforms to strengthen the role of the private sector by improving the business climate and reducing policy uncertainty,” Murray said.
He had been asked what advice the global lender was giving Zimbabwe to clear its debt with international financial institutions.
Murray said a strong coherent reform programme required concerted international efforts to revive and reintegrate the Zimbabwean economy.
“An IMF financial arrangement, for example, would only be possible after progress in resolving Zimbabwe’s arrears to other IFIs (international financial institutions) and to other creditors,” he said.
Zimbabwe owes the World Bank ($1,1 billion) and $623 million to the African Development Bank. It also owes the European Investment Bank.
Zimbabwe has been failing to live within its means, incurring fiscal deficits, which have been financed by borrowing from the domestic market through the issuance of Treasury Bills.
The new administration, led by President Emmerson Mnangagwa, has promised to undertake a host of reforms, in a bid to lure foreign direct investment.