IMF team flies into the eye of Zim economic storm

Finance minister Mthuli Ncube

AN International Monetary Fund (IMF) delegation is in the country to meet fiscal and monetary authorities as part of Article IV consultations at a time when the economy is battling several headwinds.

The visit by the delegation comes at a time when the fragile economy is characterised by a debilitating liquidity crunch, currency distortions and three-digit inflation.

The Zimbabwean economy has been worsened by the prolonged power outages lasting up to 19 hours as a result of low water levels at Lake Kariba.

Chief Director of Communications and Advocacy in the Ministry of Finance and Economic Development, Clive Mphambela, confirmed the visit by the delegation.

“There is an IMF delegation in town as part of its Article IV consultations. They paid a courtesy call with the minister (of Finance Mthuli Ncube) this week,” he told the Zimbabwe Independent.

The visit by the delegation is a follow-up to a visit in September this year where they pointed out that the country’s economic recovery hinges on viable policies.

“Uncertainty remains high. However, the outlook will depend on the evolution of external shocks, the policy stance and implementation of inclusive growth-friendly policies,” IMF said in a statement during its visit in September.

The IMF also pointed out the need for more efforts to accelerate structural reforms to anchor economic stability.

“In line with recommendations from the 2022 Article IV consultation, the near-term macroeconomic imperative is to curb inflationary pressures by further tightening monetary policy, as needed, and allowing greater exchange rate flexibility through a more transparent and market-driven price discovery process, tackling (forex) market distortions and eliminating exchange restriction.

“The RBZ (Reserve Bank of Zimbabwe)’s quasi-fiscal operations should be transferred to the budget to enhance transparency, improve the conduct of monetary and exchange rate policy and enhance central bank independence,” the IMF said.

The setting up of a Staff Monitored Programme (SMP), which is an informal arrangement between the government and the IMF to monitor the implementation of key economic programmes in the country, has been on the cards for a while and is likely to have been a major point of discussion during the current visit by the delegation from the Bretton Woods Institution.

In an interview with the Independent early this year, IMF representative to Zimbabwe Carlos Caceres pointed out that a new SMP will be effective.

“The SMP will be much better if it is part of the re-engagement process because at the end of the day you can only address debt sustainability through the process of re-engagement,” Caceres said.

He said the relationship between the country and the IMF was “as good as it gets” with Zimbabwe being the African country that receives the most technical assistance from the fund.

The previous SMP between the country and the IMF in 2020 was unsuccessful with the fund pointing out that the country was off-course after failing to meet its targets.

President Emmerson Mnangagwa’s government has since roped in the services of former Mozambican President Joaquim Chissano to head a delegation that will seek to resolve the nation’s long-standing impasse with its creditors and the international community.

Related Topics