via Zim economy faces collapse: IMF – DailyNews Live by John Kachembere 28 MARCH 2014
The International Monetary Fund (IMF) has warned of a challenging economic environment ahead and urged government to pursue strong macroeconomic policies.
An IMF staff mission, led by Alfredo Cuevas, which was in the country to hold discussions on the 2014 Article IV Consultation and the combined first and second reviews under the Staff-Monitored Programme (SMP), yesterday warned Zimbabweans to brace for tough times ahead.
“The macroeconomic environment is expected to remain challenging in 2014, and the outlook is for continued moderate growth,” said the team in a statement at the conclusion of their one-week visit.
“Achieving Zimbabwe’s fuller growth potential over the medium term depends on pursuing strong macroeconomic policies, including building up fiscal and external buffers and increasing budgetary resources going to non-personnel related spending, and implementing structural reforms to foster investment, improve the business climate, and strengthen governance and institutions, including by increasing the transparency of the minerals regime.”
The IMF team noted that it would also be necessary for the southern African country to engage with its creditors to work towards a solution to the long-standing debt arrears problem.
“Downside risks to the outlook include the possibility of further weakening of export prices, a tightening of external financing conditions, as well as risks related to policy implementation delays.
“Should these risks materialise, they would adversely impact output growth and fiscal revenue.
“To mitigate these risks, it is important to strengthen fiscal policy, identify potential sources of domestic and foreign financing, and address financial sector vulnerabilities,” warned the IMF.
The warning by the Bretton-Woods institution comes at a time the Zanu PF-led government is failing to turn around the fortunes of the economy.
Zimbabwe’s economy, which showed signs of revival during the inclusive government era, has been sliding into deflation following the July 31 election that Zanu PF won under controversial circumstances.
Growth decelerated in 2013, reflecting the impact of adverse weather conditions, weak prices for key exports, competitive pressures, low liquidity, and election-year uncertainty.
Statistics by IMF reveal that the real Gross Domestic Product (GDP) in 2013 was estimated at just above three percent, sharply down from 10,5 percent in 2012.
The annual inflation rate decelerated from 2,9 percent in 2012 to 0,3 percent at the end of last year (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 while fiscal policy last year was challenged by election-related spending pressures and higher-than-budgeted employment costs.
Government’s economic blueprint, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset) — which has been described by analysts as a pie in the sky — has failed to excite the market.
The blueprint, which requires$27 billion to be successfully implemented, risks suffering a stillbirth due to lack of funding.
Finance minister Patrick Chinamasa’s efforts to seek external funding were recently shot down by the IMF, the World Bank and China.
COMMENTS
“Zimbabwe economy faces collapse..” Meaning what? Is it facing collapse or it collapsed long back?
Of course everything the IMF has said makes sense, indeed they have said the same thing countless times in the last 34 years all to no avail. It went in one ear and straight out the second without as much as a pose!
Mugabe has never implemented any of these reforms because to do so would have meant abandoning his political patronage system – the very foundation on which Zanu PF stands.
Back in 1990 when Mugabe was forced to adopt the first of the two five-year Economic Structural Adjustment Programmes (ESAP) the regime implemented the cuts affecting the ordinary people but only trimmed a few thin branches when it came to cuts affecting the ruling elite. If anything it was the later areas that needed whole branches hacked off!
The first ESAP failed to deliver the much hoped for economic recovery and thus making the second programme necessary and the IMF and World Bank, who had proposed and were funding the programmes, asked for even deeper cuts in the ruling elite’s size of the national cake. Again Mugabe did not have the political will to implement the cuts.
By the end of the second ESAP in 2000 Mugabe was even blaming the IMF and WB for the country’s economic down turn. The two institutions, tired of throwing good money into the Zanu PF black-hole, stopped all lending to the regime.
The reforms the IMF was asking for are the same it has been asking for even before the ESAP. The only subtle difference is the IMF is not putting a cent of its own money put front because it has since learnt that Mugabe will take the money but will not implement anything!
In the past Mugabe had met the IMF team, they wittered on about “implementing structural reforms to foster investment,” blah, blah, blah. The tyrant put up with all that nonsense because the team gave him a fat cheque at the end of the lecture. When it was clear IMF will not donate even a cent to his $27 billion ZimAsset begging bowl the tyrant was no doubt “too busy” to meet the team!
Over the years Zimbabwe’s national economy has got progressive worse and worse but has never sunk to the same frightening depth as it has sunk – and it has not hit the bottom yet – and never this quickly.
Mugabe did not want to be out done by Tsvangirai with his $4 billion JUICE and so he came up with his $ 27 billion ZimAsset but that empty begging bowl is mocking him!
ESP was a poison. The same type of poison IMF continues 2 want to sell so they can rape other countries!!
ESAP I meant
Zimbabwe! Drama with a sad ending.
The economy has collapsed. It is just a question of how bad does it get and how much is it going to hurt the common person in the street.
I fear it is going to get a lot more distressing and painful before someone wakes up and takes control of this mess.
Some people say “Experience is the best teacher.” ZANU PF has had more experience in failing and destroying our our economy for 34 years. Our economy is agricultural. ZANU PF destroyed agriculture through unfriendly economic policies. Listening to ZBC News of day before yesterday and yesterday, the President and Gedion Gono are planning to acquire 4 500 hectares to expand Gono’s chicken business. What we want as a nation are not chickens and eggs, we want maize. We are importing maize instead of growing it. Poultry farming competes with the citizenry for maize at a time we don’t have it. Priority for food should be given to people because chickens and their eggs did not vote for ZANU PF in 2013 elections.
4 500 hectares are enough for 22 farmers at 200 hectares per farmer. Why deprive other people of land to give to one person who got rich by invading bank accounts of individuals and companies in 2007. People did not fight the second Chimurenga for the President and Gono.
The Intensive chicken farming set up by Gono is disgusting on so many levels. 1) The world has already moved away from these practices having learned that the spread of infectious diseases/viruses caused by keeping massive numbers of birds/pigs/cattle/ close together means that growth hormones and antibiotics have to be used. We have learned that free range chickens/cows/pig are not only healthier for people to eat but mean that dangerous growth hormones and antibiotics are replaced by skilled animal husbandry. (i.e real farmers) 2)In Zimbabwe keeping a handful of healthy free range birds is an easy way for poor people to keep protein in their diet and to sell any birds they raise surplus to their families’ requirement. Gono is defying every piece of evidence, everything we have learned from past mistakes. Typical of his ilk.
We pride ourselves as being top, really, on the African ladder… We feel that we have actually been advancing rather than going backwards.
Robert Mugabe
ZanuPF has placed a perfectly good , strong country onto it’s knees…. they are evil!
“how much is it going to hurt the common person in the street.”
When the unpaid soldiers and police start demanding food and money from the common people and small businesses, it will hurt a great deal. Those men will not be content to sit in their barracks and starve.
the yoke of colonialism is to blame for the corruption, mismanagement and theft. We say no no no we say shame shame shame
The economy will never disappear completely. This is scant comfort for all of those who are suffering now, and the every larger number who will suffer from here on.
It is hard to be too sympathetic since so many of those who will suffer most have voted over and over again for the authors of our ruination
Not facing – is in the process of collapsing no one cares have another party for few million at independence – should be called dependence – on handouts!
why dont we use one currency this thing of using many currencies makes the USA dollar purchasing power weak…. lets do something about this!
Concerned student I am interested in what you would sugguest we do? A currency is just an item one uses to trade with….it was once gold coins, it can be any item at all that the buyer and seller agrees is valid. It does not matter what you call it – the point is whether the buyer and seller agree on the value of it. Our problem is not currency our problem is that we HAVE NOTHING TO SELL. THAT IS WHY OUR OWN CURRENCY DIED A DEATH! Until we start producing something Zimbabwean it matters not HOW MANY NOR WHAT CURRENCIES we us…..WE HAVE NONE and anything we try to print will be totally worthless. Diamonds are presently the only recognised Zimbabwean currency being taken by our trading partners. So I go back to my question to Concerned Student….what would you sugguest we do?