The Sunday News
THE relationship between Zimbabwe and the International Monetary Fund has since the coming in of the new dispensation led by President Emmerson Mnangangwa evolved in a positive direction as the country seeks to re-engage the international community in its accelerated economic revival quest.
Last month, President Mnangagwa and IMF managing director Ms Christine Lagarde met on the sidelines of the World Economic Forms in Davos, Switzerland where the two explored ways of reviving relations. IMF spokesman Mr William Murray in a statement on Friday said the Bretton Woods institution was happy with efforts being done by the new dispensation to normalise relations.
“Our relationship with Zimbabwe has been evolving in a very positive way and for some months now. They have normalised their debt . . . we’ve normalised our relationship in terms of their arrears to the IMF, but they still have a significant debt overhang problem with other international financial institutions and other official creditors,” he said.
Mr Murray, however, added that a programme for Zimbabwe was still dependent on the ability of the country to clear arrears with other creditors.
“But let me also make a couple of points on Zimbabwe. Again, the managing director met with the President (Mnangagwa) in Davos and it was an opportunity for them to update each other on where things stood. As we noted, and we have been noting, the Zimbabwean economy faces severe challenges.
“An unsustainable fiscal deficit has led to severe liquidity shortages, created inflationary pressures, and threatens the viability of the financial sector and Zimbabwe’s exchange rate regime.”
He added that restoring growth will require concerted efforts to tackle the fiscal deficit including through rationalising and better targeting the expense of agricultural 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.
The authorities are cognisant of these challenges that they face and the economy is facing and they have expressed their determination to address them.”
Mr Murray said Zimbabwe’s 2018 budget also stressed Government’s intentions to re-impose budget discipline, reform and open the economy, and engage with the broader international community, which is ongoing and important in terms of arrears clearance.
“The IMF stands ready to support the authorities and their efforts to address these challenges. But as we noted, in addition to a strong coherent reform programme, a concerted international effort will be required to revive and reintegrate the Zimbabwean economy.”
The IMF has been flicking signs of intending to reintegrate Zimbabwe in its programmes. The institution has been impressed by efforts by the new Government’s efforts to revive relations with donor and international community.
Most international donors withdrew support to Zimbabwe after 2000.
The country cleared its 15-year-old financial arrears to the IMF in 2016 but is still in arrears with the World Bank and African Development Bank, which hampers its ability to tap development financing from the two institutions, though there have also been moves in a positive direction.
The Government has also said although they are not yet there in terms of debt clearance, they had made efforts to settle its debts and have come up with a financial programme meant to address the issue.
A team from IMF is also expected in Zimbabwe in the country in the next few weeks to engage the Government as the two institutions continue their talking to find common ground.