IMF not ready to extend financial support to Zimbabwe

THE International Monetary Fund's (IMF) two-week-long high-level visit ended on Wednesday amid revelations that no financial support will be extended to Zimbabwe without authorities undertaking serious monetary and fiscal reforms.

The visiting IMF delegation was led by Wojceiche Maliszewski to discuss Zimbabwe's request for a Staff Monitored Program (SMP) and commence the 2024 Article IV Consultation.

"However, the IMF is currently precluded from providing financial support to Zimbabwe due to its unsustainable debt situation- based on IMF's Debt Sustainability Analysis- and official external arrears.

"An IMF arrangement will require a clear path to a comprehensive restructuring of Zimbabwe's external debt, including the clearance of arrears and a reform plan that is consistent with durably restoring macro-economic stability, enhancing inclusive growth, lowering poverty and strengthening economic governance," the delegation said in a statement.

The Bretton Woods Institution pointed out several issues they have raised concerns over which include reforms centred on structural, fiscal and monetary.

They called for the urgent need to address the sources of fiscal pressures including Quasi Fiscal Operations of the Reserve Bank of Zimbabwe (RBZ) highlighting the urgent need to amend the law to align with the central bank's core mandate.

While the IMF acknowledged the latest steps of transferring the RBZ's external liabilities to the Treasury- which include long and short-term liabilities and blocked funds represent an important step in this regard, it said the larger than-anticipated costs of servicing these obligations will open a financing gap in the 2024 budget and needs to be dealt with.

Said the IMF: "Structural reforms aimed at improving the business climate, strengthening economic governance and reducing corruption vulnerabilities are key for promoting sustained and inclusive growth and bode well and bode well for supporting Zimbabwe's development objectives embodied in the country's National Development Strategy 1 (2021 – 2025)."

Speaking to NewZimbabwe.com soon after the IMF's remarks, economist Prosper Chitambara said the recommendations are a reiteration of concerns raised before.

"The remarks by the IMF are just a reiteration of the same factors which the local private sector and academia have since recommended. Concerns have since been raised on structural reforms including key institutional reforms like amending the RBZ Act, reformation of parastatals and State Owned Enterprises.

"Installation of discipline in the economy is also very critical and all these factors combined will allow the economy to grow inclusively and sustainably," he said.