ZIMBABWE has asked the International Monetary Fund (IMF) for a staff-monitored programme (SMP) as part of the structured dialogue procedure for the nation's arrears clearance.
The southern African nation is engaging its creditors through a high-level debt dialogue mission led by former Mozambican President Joachim Chissano and African Development Bank (AfDB) president Akinwumi Adesina.
SMPs are arrangements between country authorities and the IMF to monitor the implementation of the authorities' economic programme, but are not accompanied by financial assistance.
Zimbabwe has had a number of SMPs with the international lender.
Finance minister Mthuli Ncube on Monday said the SMP was also a requirement by development partners so that they can assist the country to find a financing partner who can give the country necessary funding to clear its arrears.
“It is part of the structured dialogue process for arrears clearance. It is necessary for us to enter into the staff-monitored programme with the IMF and we expect that process to take place after elections and we are likely to start the SMP programme in the last quarter of the year,” Ncube said.
“I think this is a good thing because it allows us to have a monitored process in terms of our reform agenda. This is also what the development partners are requesting so that they can then assist us with identifying the financing partner who can give us necessary funding to clear our arrears. It is called a sponsor in the language of arrears. When you get in a wet SMP preferably you would want to be sponsored. Being financed means it's wet, it's not dry.”
The minister said it was the government’s expectation that the partners would support the country in some key areas around food security, climate change, social protection as well as education sector funding.
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“They may have to repurpose that funding so that it is clear that the funding is coming during the implementation of the SMP programme to achieve the desired level of wetness and financial support.”
Adesina said the decision to embark on an IMF SMP was reassuring to creditors, development partners and multilateral and bilateral financial institutions, and would ensure that the reforms committed to are implemented.
“There is a very strong and measurable commitment by the government to economic and fiscal policy reforms. The IMF Article IV mission in December 2022 was successful and was approved by the board of the IMF,” the AfDB chief said.
“The government has taken the decision to eliminate multiple exchange rates, introduce an enhanced foreign exchange auction market, transfer outstanding debt of the Reserve Bank of Zimbabwe to the Treasury for greater transparency and avoiding off-budget financing; and end the quasi-fiscal activities of the Reserve Bank of Zimbabwe.
“It has also taken decisions to end subsidies and reform State-owned enterprises. Also, the establishment of the liquidity management committee is a proactive measure that will promote effective co-ordination between fiscal and monetary policies.”
He, however, said the most difficult and more sensitive reforms were governance reforms.