Source: No bail out ’til you implement reforms: WB – NewsDay Zimbabwe December 3, 2019
BY TATIRA ZWINOIRA
THE World Bank (WB) has ruled out a possible financial bailout to President Emmerson Mnangagwa’s government for now, saying Zimbabwe will only continue to benefit from technical assistance, analytical work, and emergency response support to victims of Cyclone Idai until after the country has met certain reforms demanded by international financiers.
This comes after Finance minister Mthuli Ncube recently met with WB president David Malpass, where the Zimbabwe Treasury boss claimed government had made great strides in implementing currency and economic reforms.
In emailed responses to NewsDay Business, a World Bank spokesperson said: “Our engagement with the government of Zimbabwe is currently limited to strategic dialogue, technical assistance, analytical work, and emergency support in response to Cyclone Idai”.
“The World Bank Group continues to consult with the International Monetary Fund (IMF) and other development partners to establish a common platform for international financial institutions to re-engage in Zimbabwe,” the WB official said.
As part of an amendment to the United States 2001 Zimbabwe Democracy and Economic Recovery Act last year, all US executive directors of a multilateral development bank were ordered not to allow any debt relief or further financial support to Zimbabwe.
This would only be lifted if the Zimbabwe government met certain conditions that involve resolving the 2000 land reform programme, respecting human rights, investigating and prosecuting sanctioned individuals and respecting human rights.
Government, which owes US$1 billion to the WB among other institutions, urgently needs a bailout package to fund its expenditure and stabilise the local currency.
“In the absence of international support, Zimbabwe’s macro-economic challenges may persist. With dwindling reserves, there is a high-risk of exchange rate overshooting, contributing to inflationary pressures. Climate-related risks may constrain recovery of the agriculture sector in the medium-term exacerbating food insecurity,” said the World Bank, in its October 2019 overview of Zimbabwe.
“Social and political pressures could lead to policy slippage, delay in macro-economic stabilisation and political reforms. This might jeopardise the reform agenda under the IMF Staff Monitored Programme and delay the government’s re-engagement aspirations.”