Tinashe Makichi Business Reporter
The International Monetary Fund has commended the Government for making progress in implementing their macro-economic and structural reform programmes particularly on the clarification of indigenisation. In its first review of the Staff-Monitored Programme the global financial institution also lauded Government for its success in rolling out initiatives to restore confidence and improving financial sector soundness, and strengthening public financial management.
The first review under the Staff-Monitored Programme with Zimbabwe was completed on April 8.
“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. During 2015, the authorities’ policy reform agenda will continue to focus on reducing the primary fiscal deficit to raise Zimbabwe’s capacity to repay, restoring confidence in the financial system; improving the business climate and garnering support for an arrears clearance strategy,” said the IMF.
Strong performance under the SMP would improve Zimbabwe’s repayment capacity and demonstrate that it can implement reforms that could justify a financial arrangement, which could help tackle the country’s economic challenges.
The IMF said the authorities have also stepped up their re-engagement with creditors, including increasing payments to the World Bank and the African Development Bank.
“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,” it said.
The IMF said its staff will continue to support Zimbabwe’s economic reforms and their pursuit towards a debt relief strategy.
“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 and its adjustment and ongoing reform process,” said the IMF.
The IMF, however, noted that the country’s external position remains precarious while economic prospects for this year remain subdued.
The IMF said the country has remained in debt distress with economic growth expected to weaken further this year.
“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,” the IMF said.
The Fund said key risks to the outlook of the country’s economy stem largely from a further decline in global commodity prices, fiscal challenges, and possible difficulties in policy implementation.
The 15-month SMP approved in October 2014 constitutes the lynch-pin of the authorities’ roadmap for building a strong track record towards normalising the relationship with Zimbabwe’s creditors and mobilising development partners’ support.