Africa IMF Zimbabwe

IMF refuses to bail Zimbabwe until there is a repayment plan for national debt arrears

By Kelvin Mupungu

  • International Monetary Fund (IMF) staff mission, led by Mr. Alfredo Cuevas, met with the Zimbabwean authorities in Harare during March 12-26, 2014
  • The discussions on the 2014 Article IV Consultation and the combined first and second reviews under the Staff-Monitored Program (SMP).
  • The Staff Monitored Programme was approved in June 2013 and extended by 6 months in December 2013
  •  The IMF team held productive discussions with relevant government officials including Advisor to the President Dr Timothy Stamps.
  • The discussions covered recent economic developments and the near and medium-term outlook and risks for Zimbabwe; implementation of the policies and reforms under the SMP; and implementation of other policies to restore fiscal and external sustainability, enhance financial sector stability, and unlock the country’s potential for sustained growth and poverty reduction.
  • IMF noted that  Zimbabwe’s economy expanded in the last 5 years but the rebound phase of its recovery is over.
  • Growth decelerated in 2013 ,
  • impact of adverse weather conditions, weak prices for key exports, competitive pressures, low liquidity, and election-year uncertainty.
  • Real GDP in 2013 is estimated at just above 3 percent, sharply down from 10½ percent in 2012.
  • The 12-month inflation rate decelerated from 2.9 percent end-2012 to 0.3 percent at end-2013 (and further -0.5 percent in February 2014), reflecting weak domestic demand and the depreciating South African rand.
  • The external account deficit widened in 2013, and reserves remain significantly below adequate levels.
  • Fiscal policy in 2013 was challenged by election-related spending pressures and higher-than-budgeted employment costs.
  • The macroeconomic environment is expected to remain challenging in 2014, and the outlook is for continued moderate growth.

IMF Recommendations

Achieving Zimbabwe’s fuller growth potential over the medium term depends on:

  • pursuing strong macroeconomic policies,
  • building up fiscal and external buffers
  • increasing budgetary resources going to non-personnel related spending,
  • implementing structural reforms to foster investment
  • improve the business climate,
  • strengthen governance and institutions,
  • increasing the transparency of the minerals regime.

National Debt

  • IMF team advised Zimbabwe to engage with their creditors to work towards a solution to the long-standing debt arrears problem.
  • National debt is estimated at between $10 -$13 billion dollars

Outlook

  • Based on the current economic situation, outlook expects a  further weakening of export prices,
  • a tightening of external financing conditions,
  • policy implementation delays.
  • adverse impact on output growth and fiscal revenue.

Please access more -http://www.imf.org/external/np/sec/pr/2014/pr14135.htm

-IMF

 

 

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