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.
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.
- 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
- 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