Engage lenders, IMF urges Zim – DailyNews Live by John Kachembere 30 MARCH 2014
The International Monetary Fund (IMF) says Zimbabwe must engage its creditors to arrest economic collapse.
Following President Robert Mugabe’s election victory last year, the economy has regressed with investors shunning the country and companies closing shop, among other challenges.
The country, saddled by multi-billion dollar debt, is struggling to secure international lines of credit and external budgetary support.
“It will be necessary to engage with the country’s creditors to work towards a solution to the long-standing debt arrears problem,” IMF said last Thursday.
Economic analysts have also warned that Zimbabwe’s foreign and domestic debt will continue to undermine the country’s creditworthiness and compromise its ability to secure new funding.
The southern African country is failing to attract new capital to stimulate growth in the economy due to a $10 billion external debt owed to various international money lenders.
Economist Brains Muchemwa said it was important to consider the ability of government to generate future revenue to offset the current debt stock.
“The ability of the Zimbabwean government to service its debt is a function of the vibrancy of its revenue model, implying therefore that the economy must keep growing, broadening the tax base while a rational civil service reform needs to be implemented to conserve cash and improve the debt servicing,” Muchemwa said.
He said disposal and commercialisation of loss-making parastatals needs to be prioritised, and equally, the tightly regulated industries such as telecommunications needed to be further liberalised so that government generates more revenue from taxation.
This comes as the country — which adopted the IMF prescribed staff monitoring programme in June last year, to help it clear external debts and give it access to new credit from international lenders — has indicated it will make a “token payment” to the international money lender to reduce its debts.
“We’ve entered into a payment plan,” Finance minister Patrick Chinamasa said this week. “It’s a token payment because we don’t have the capacity right now to service the debt.”
Zimbabwe’s economy is recovering from years of collapse, prompted by a political crisis that hit the currency and caused hyperinflation.
However, lack of aggregate demand in the country, company closures and controversial economic policies are some of the risks threatening to derail economic revival.
In December, Chinamasa forecasted 6,1 percent growth, boosted by the recovery of the agricultural sector, mining and construction.
But the IMF said the country’s potential to achieve fuller growth depended on increased investment spending by the government, improving the investment climate and transparency in the mining sector.
The World Bank and the IMF suspended aid to Zimbabwe in 1999 over differences with the Zanu PF regime’s unsustainable economic policies.
Zimbabwe currently owes the IMF $124 million. It fell into arrears in 2001, and was expelled from the Fund in 2005.
The World Bank, which is owed $1 billion, says Zimbabwe should devise a comprehensive arrears clearance plan with international lenders to qualify for fresh loans.
The institution’s programmes in Zimbabwe are currently limited to humanitarian aid.
COMMENTS
If only we had a credible govt freely elected by the people and we demonstrated true democracy. Most of the debts would be cancelled and we could start afresh and return to being a proud people. For now we are only beggars and slaves to the Chinese. Shame on ZANUPF. They need to dissolve and form a new party with new leaders and idea’s if they want to survive in the future.
@ moyokumusha. Wow you are so clever.
If the opposition won debts would be cancelled because everyone knows they are dim and could never sort out any economy.
Because they lost and we have a Zanu government in an undisputed election other than unsubstantiated propaganda with not one bit of EVIDENCE.
What we need is a democratic election by the west and let them choose a government – that is supposedly your way forward, become a colony again.
In fact if the mal contents were silenced and sabotage/anti Zimbabwe propaganda stopped/ corruption completely addressed, and start has been made, we would not need our debts cancelled.
Again if we had the compensation due for the illegal sanctions and economic damage caused by the imposed ESAP – we wouldn’t have debt at all.
This is really what is needed.
To avoid noise, you just stop urguing with a fool. Every change of government brings hope, change of policies and perception. Don’t drop the line apotical, I m still talking, and talking to you. Do you think Mugabe was smarter than Smith in 1980? The answer is NO! But the demands of change were in the air. He grabbed the opportunity. Had he not ventured in the science or art of killing fellow countrymen and women, by now he could be quietly be autocruising. Instead he wasted energies and resources. IMF and WB money designed for developmt wend to train 5th brigade in Korea to kill over 100 000 brothers n sister during Gukurahundi! What a waste! In 1987 offices were created to reward (vharamuromo) to leaders of the victimised. Thus how the 2nd Vice President and related perks (or waste) came about. From 1999 to date, Mugade he used more resources on his security and oppressing opposition than he did on develpment. I suggest IMF and WB keep their money until we are liberated. I m counting on MDC as a potential sound government that will be accountable, GNU is there to testify.
Apolitical, you continue to write the biggest load of bollocks I have ever read. Everybody knows what and who caused the problems and you still support them! You are a fool and I wonder how many posts we will see from you when you do not get your salary. Zanu trash
If it is an undisputed election how come I personal know a young man who was involved in rigging and intimidating? Please answer. And that is besides my own story!
Moyokumusha well said!! True patriots know what needs to be done for us to be accepted back into the international community.
Lets see Mugabe get down on his knees and admit he has always been wrong about every single thing. Nothing else will do. He will be historical garbage soon no matter what. Then we can move on and become part of the world again
The amount shawn is surely conservative. but if its true,$1.5 billion approximately ,then Bob should call upon himself , Obert, Mnangagwa, Mujuru, Chiwenga, Chiyangwa, and Gono to pay it up from loot.
Between this lot ,they can literally come up with $100 billion to kick start their Zimasset.
Why come up with an idea if you can not back it up.
Thieving malcontents.
apolitical, there are a number of people on this forum who have been surprised by the deafening silence from you. It’s no wonder because you raise your head above the radar and come up with a load of trash again. Zim is already a colony of China and we all know it. Furthermore you go on about evidence that the 2013 elections were rigged. OK, lets put the boot on the other foot and show us evidence that the elections were not rigged. How about asking all those in the diaspora if they got a vote? Your arguments are frivolous chum. Take a lesson from roving ambassador.
Zimbie, do compare apolitical to THE AMBASSADOR bcoz its like comparing bulls to the wolves. Apolitical was born in the early 90s unlike the Ambassador who has alway respresented hi people. The Ambassador is honoured highly while apolitical links the b*****t. If you try to see what comes out of his mind……. Lol, rubish. He has been off the forum because there was no electricity kwaMukuwisi, coupled by the fact that the chinese cellphone had gone to be repaired. Mahwani kani.
Pana apolitical ndakazvara ura. I regret kuita mwana akadai. Kungoti haurasi mbereko nekufirwa, ndotochena moyo
Talk about scales over a persons eyes. Apol takes the cake
1.5Billion it’s nothing if that is true, if millions can be spent on upgrading roads for for 1 day event by an individual ,It should be payed by now , the problem here is we have people like Apolitical are colonizer himself we are not going anywhere , the evidence to that is grabbed farms,want half shares from from companies that you did not work for, the worst is when you grabbed short wave radios from povo staving them the truth and feeding them with load of trash, I don’t they know how much is being stolen by you and your friends.
Apo surely you don’t believe what you write?? You’re just here to give us a laugh??
Lenders don’t want to engage corruption and failure