Govt should capitalise on windfall of goodwill

via Govt should capitalise on windfall of goodwill – NewsDay Zimbabwe September 15, 2015

The recent announcement by an International Monetary Fund (IMF) executive that Zimbabwe has so far met its quantitative targets under the Staff Monitored Programme (SMP) shows that the country is shedding its bad-boy tag and is ready to undertake reforms.

The successor economic reform plan runs up to December and will have its final review next year, after which IMF has proposed a three-year programme. Under the SMP, Zimbabwe was tasked to restore confidence in the financial sector and work on mechanisms to resolve its debt crisis.

IMF gave a clean bill of health on the country’s financial sector imploring authorities to further reduce the ratio of non-performing loans.

Zimbabwe is working on a plan to be presented to creditors on the sidelines of the World Bank/IMF annual meeting in Lima, Peru, next month.

These credible measures are testimony of the country’s sincerity to becoming a member of the global community and start getting long-tenure loans necessary to revamp the economy.

What is needed now is for Zimbabwe to quicken the pace of reforms especially in the civil service and parastatals. That would result in freeing the fiscal space and allow government to channel more resources to infrastructure development, which has been neglected over the years.

Finance minister Patrick Chinamasa plans to reduce the wage bill to 40% of revenue from 83% and should be supported in that regard. The plan is a test on government’s sincerity on efficiency.

The austerity measures will be an unpopular move on the part of the ruling Zanu PF, which is eager to maintain its stranglehold on power. Yet the positives outweigh the negatives, as reform will lay the path for the country’s economic growth, as more resources would be available for infrastructure projects.

Elsewhere in this paper we carry a story of the impending visit by the European Investment Bank to Zimbabwe to sign agreements, where the European Union lender will provide lines of credit to the banking sector for on-lending to various sectors of the economy.

This is a plus for the country, which badly needs cheap long-tenure loans. This windfall of goodwill has to be guarded jealously. Zimbabwe cannot afford to go it alone and needs to be in the league of nations that access funding from multilateral and bilateral financial institutions.

Government has to speak with one voice on policy matters and repeal toxic legislation such as the Indigenisation and Empowerment Act, which is an anathema to boosting confidence regarding the country as a destination for investment.

The sooner this is done, the better.