World Bank lauds Zimbabwe reforms

The World Bank sees Zimbabwe's reforms fixing economic fundamentals and economic blueprints, such as the Budget Strategy Paper and the National Development Strategy-1 (2021-2025), as being the major planks to advancing economic growth and give substance to the vitally needed re-engagement drive.

The bank has noted that Zimbabwe has identified the key reforms to strengthen financial management, economic recovery and new growth.

President Mnangagwa is next week expected to launch the NDS-1, a successor economic blueprint to the Transitional Stabilisation Programme (TPS), which runs from October 2018 to the end of this year. Cabinet approved the NDS-1 this week.

Responding to inquiries from The Herald, a World Bank spokesperson said Zimbabwe's domestic policies such as the NDS-1 and the Budget Strategy Paper, have the potential to boost growth and create more, better, and inclusive jobs, in support of achievement of Government's aspirations to reach an upper middle income status by 2030.

"The Government's plan to issue an NDS is welcome. We look forward to seeing the strategy which we understand will be released in the near future," said the spokesperson.

"What matters most is the quality of their implementation and the buy-in from stakeholders. In addition, with adverse global economic environment owing to Covid-19, domestic policies will need to be designed to counteract the adverse impacts of external economic problems as well as health and climate-related shocks, the depth and breadth of which are difficult to predict."

The World Bank commended Zimbabwe for its transparency on debt reporting, saying consolidation of fiscal accounts has helped contain the increase in debt while the real value of domestic debt has been eroded by inflation.

"We also note improved transparency of debt reporting which is a positive development. Zimbabwe ranks higher than many of its peers in the region in terms of debt reporting, as shown in the October 2020 World Bank Africa Pulse report.

"Improving debt transparency through publication of the annual borrowing plan, the adoption of a debt management strategy, and a re-engagement roadmap would strengthen the country's ability to borrow at better financial terms and conditions.

"However, Zimbabwe continues to be in debt distress as the majority of external debt is in arrears. This limits Government's ability to respond to climatic, health and economic shocks, such as those caused by the Covid-19 pandemic by borrowing at concessional terms or participating in global initiatives, such as the global Debt Service Standstill Initiative," said the World Bank.

The bank wants Zimbabwe to continue engaging multilateral agencies as part of deliberate measures to court foreign direct investment. It added that efforts to re-engage with international financial institutions were equally key as this will not only allow for financing of much-needed investments, but will also help in attracting capital into the country.

The World Bank commended the Budget Strategy Paper that was launched by Finance and Economic Development Minister, Professor Mthuli Ncube.

It said the paper prioritises building resilience and economic recovery, and achieving the priorities as mentioned in the strategy paper, will require continuing efforts to stabilise the economy through prudent fiscal and monetary management, and a raft of structural reforms including measures to support the disadvantaged groups of the society.

"What will be important is for the budget allocations and supporting policies to mirror the priority sectors," said the bank.