IMF puts caveat on Zim currency reforms

BY FIDELITY MHLANGA

THE International Monetary Fund (IMF) says the success of currency reforms will depend on the implementation of an effective monetary policy framework supported by market-determined interest rates and prudent fiscal policies.

According to an IMF Press briefing held last week after Finance Minister Mthuli Ncube met IMF director Christine Lagarde in Washington DC, government’s removal of the 1:1 parity that existed between the bond currency and US dollar last month is a step in the right direction that potentially can address distortions that were compromising the economy.

“Our initial evaluation of that which has been announced by the Zimbabwean authorities recently is that it’s a step in the right direction to address distortions that have significantly impaired those macro-economic outcomes,” said IMF director of communications, Gerry Rice.

“Its success, of course, the currency reforms’ success, will depend on the implementation of an effective overall monetary policy framework supported by market-determined interest and exchange rates, together with prudent fiscal policies. So it’s the major set of challenges facing Zimbabwe. The IMF is trying to help. We’re engaged with them on how we can help them as much as possible.”

“Zimbabwe has no financing programme with the IMF, but we’re looking to be supportive as we can, and so stay tuned for further developments,” he said.

Ncube was in Washington DC where he briefed Largade and other financiers about the economic developments in the country.

Ncube is canvassing for support for a plan to clear some $2 billion in arrears owed to the World Bank and the African Development Bank (Afdb) as part of the 2015 Lima plan, critical to secure fresh lines of credit and restore confidence in the market.

“As we said in the statement that we issued, the minister briefed Madam Lagarde on economic developments in Zimbabwe and the reforms that you refer to that have been implemented since they last met. As you know — well, maybe people don’t know — but the fund does not have a financing programme with Zimbabwe, though we continue to have discussions with the authorities to assist them in implementing the economic reforms contained in their transitional stabilisation
programme, which is a wide ranging stabilisation and reform programme aimed at addressing what is clearly a deep macro-economic imbalance challenge, as well as a broader set of social and economic challenges. So the discussions are on — we’re engaged. The discussions are certainly continuing,” said Rice.

Ncube is working on a Transitional Stabilisation Programme which seeks to undertake reforms, such as improving the ease of doing business,
improving competitiveness, opening the country to international investors and financiers.

2 Comments

  1. The bottom line is Zim has no financing programme running with IMF right now, that they are looking to be supportive is diplomatic talk so Mthuli will not feel his trip to meet IMF boss was not a waste of resources. Mthuli’s TSP is being resisted back home coz it was forced onto the people of Zimbabwe there was no consultation at all with other stakeholders like business. Even his government has not embraced the idea holistically it is still spending carelessly how then does one expect the IMF to embrace a programme that has no commonality with locals.

  2. Farai Johnson Nhire

    Zimbabwe only needs fiscal discipline and the support of friendly nations and transparent management of proceeds from our natural resources. The habit of borrowing, pasi nayoooooooooo. We also need to separate serious business from useseless populism. Experts like Mthuli Ncube must be given oportunity to apply their best brains to the task at hand and that seems to be currently the case. Let us also gradualy move away from the us dollar system like others are doing. Our major trading partners are South Africa and China. Why not practicaly introduce the Yuan and the Rand in our multi currency system? It is my hope that we will soon see things going that way. Make it possible for south africans to invest here using the Rand and Chinese should also be able to invest using their Yuan. No need yekugaronyengerera vanotivenga when we have friends and neighours who are well developed! I hear zimbabwean can now send their relatives money in rands on ecocash from South Africa and that is a very encouraging development.

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