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Chamisa's MDC unhappy with IMF assisting Zimbabwe

by Staff reporter
15 Apr 2019 at 10:58hrs | Views
Cyclone Idai, which brought unprecedented destruction as incessant rain and gusty winds caused catastrophic damage, has prompted the International Monetary Fund (IMF) to agree to deepen the Fund's engagement with Zimbabwe through a 12-month programme to assist and monitor the country's reforms of government operations and fiscal management.

The significant milestone for Zimbabwe - marking the move toward normalising relations with international financial institutions - has angered the main opposition MDC, which has angrily rejected it as "a mendacious, premature chlorination and endorsement of the failed military government."

The so-called Staff-Monitored Programme (SMP) does not involve financial support to the economically-ravaged southern African country, but is a necessary step toward a potential IMF loan programme. It is expected to start in a "few weeks" pending approval, according to Christine Lagarde, the managing director of the IMF.

It sends a positive signal to international donors about Zimbabwe's commitment to improve its governance.
The programme will aim to devise ways to increase government revenue and help its budgeting process. It will also facilitate a return to macroeconomic stability.

This comes after a team from the IMF, led by Gene Leon, visited Harare on April 1-5 for days of talks with Zimbabwean officials where an agreement was reached on macroeconomic policies and structural reforms that can underpin an SMP.

Leon's team met with Finance minister Mthuli Ncube, Reserve Bank of Zimbabwe governor John Mangudya, other senior government and RBZ officials, and non-government representatives.

Lagarde told a regular news conference on Saturday at the end of the two-day IMF spring meetings at its headquarters in Washington DC that it was absolutely imperative for the IMF to help Zimbabwe pick the pieces from the devastation wrought by Cyclone Idai last month.

Lagarde, who was accompanied by Lesetja Kganyago, chairperson for the IMF's international monetary and financial committee (IMFC) and Gerry Rice, the Bretton Woods Institution's communications director, said they are preparing to move quickly to help ease Zimbabwe's worsening humanitarian crisis

"Well, first of all, I would like to reaffirm that we will be conducting a SMP with Zimbabwe. And it is particularly appropriate that we do that expeditiously, given the hardship and the loss caused by the recent cyclone.

"And we will mobilise energy in order to support the authorities," Lagarde said, adding the IMF was moving to preserve its role at the centre of the global financial safety net.

"I can assure you that, on the principle of the social protection of the most vulnerable, of inclusion, we will be deploying the principles by which we now operate.

"As I have announced to the IMFC this morning, a social protection framework is going to come up for discussion at the board in the next few weeks, and we will certainly endeavour to deploy social protection principles in the work that we do with the authorities.

"The second point that I wanted to mention, which I believe can and will help Zimbabwe as well; given the current monetary and currency situation, if used in a smart way, I would hope that financial technologies can be deployed in order to include as many as possible.

"And any knowledge, any best practices that we are aware of, we will certainly make them available in the course of the weeks to come," the IMF matriach said.

At the end of the visit to Harare two weeks ago, Leon said: "Zimbabwe is facing deep macroeconomic imbalances, with large fiscal deficits and significant distortions in foreign exchange and other markets, which severely hamper the functioning of the economy.

In addition, Zimbabwe is facing the challenge of responding to the adverse effects on agriculture and food security of the el Nino-related drought, as well as the devastation from Cyclone Idai.

"The SMP, which will be monitored on a quarterly basis, aims to implement a coherent set of policies that can facilitate a return to macroeconomic stability. Successful implementation will assist in building a track record and facilitate Zimbabwe's re-engagement with the international community."

The IMF team said the policy agenda to be monitored under the SMP is anchored on the authorities' Transitional Stabilisation Programme (TSP) and emphasises fiscal consolidation, the elimination of central bank financing of the fiscal deficit, and adoption of reforms that allow market forces to drive the effective functioning of foreign exchange and other financial markets.

"In addition, the agreed policies -both macroeconomic and structural - can be expected to remove critical distortions that have held back private sector growth and to improve governance.

The SMP also includes important safeguards to protect the country's most vulnerable people.

"This staff-level agreement is subject to review by the IMF's management," Leon said.

Zimbabwe's main opposition said yesterday the proposed IMF SMP is "an entry point for full support of the regime and it ignores the factors arresting the Zimbabwean economy."

"Zimbabwe has had a stolen election; it was disputed by most players including the biggest political party, the MDC.

 More importantly, the election was condemned by every credible local and international observer mission," MDC spokesperson Jacob Mafume said, citing the International Republican Institute (IRI) and the National Democratic Institute (NDI) observer mission reports, the EU and Commonwealth reports that he said found the election to have shortcomings "giving rise to deep concerns that the process has not made the mark."

Mafume said the IMF is not and has never been able to hold tyrannical regimes to account.

"Instead,  under the excuse of sovereignty and through the instrumentality of these SMPs it has bought breathing space for autocrats unwilling and incapable of reform," the MDC spokesman fumed.

"In Zimbabwe, the IMF have compromised and lied for the purposes of creating staff work for themselves especially during (former Finance minister) Patrick Chinamasa's time around the Lima Plan," he said, referring to the debt and arrears clearance plan which was first adopted in Lima, Peru, in 2015 at the World bank/IMF spring meetings anchored on several financial sector and structural reforms.

"Their approach is not based on multi-stakeholder consultation meant to reach an objective understanding of the political economy. That is why as MDC we reject the SMP," Mafume said.

"The onus is on the regime to carry out the reforms, it has undertaken to do so on its own terms.

"Those reforms are defined in the TSP and the 2019 Budget. The regime needs to earn its right to be respected."

Source - Daily News