‘IMF to continue supporting reforms’

via ‘IMF to continue supporting reforms’ – The Zimbabwe Independent January 22, 2016

An International Monetary Fund (IMF) team is expected in the country next month as the Bretton Woods institution goes for the third and final review of Zimbabwe’s Staff-Monitored Programme (SMP) and the annual Article IV consultations.

Fidelity Mhlanga

The IMF team will be in the country from February 24 to March 11 to assess progress under SMP, which ended on December 31 last year. The IMF team’s visit comes at a time Zimbabwe, which owes US$1,8 billion to international financial institutions, is facing an El Nino-induced drought which is posing a threat to the country’s economic and financial situation.

“Apart from the final review under the Staff-Monitored Programme, the team will undertake the Article IV consultation. This is an exercise where we step back a little from the day-to-day challenges and provide a medium-term assessment of the economy,” IMF resident representative Christian Beddies said.

The SMP is an informal agreement between country authorities and the fund staff to monitor the implementation of the authorities’ economic programme.

The SMP, which was approved in October 2014, is a 15-month programme which envisages, among other things, to bring normalcy to relations between Zimbabwe and its creditors.

Zimbabwe is mobilising funds to clear the US$1,8 billion arrears to the World Bank, IMF and the African Development Bank.

Beddies said IMF staff will continue to provide targeted technical assistance in order to support Zimbabwe’s capacity building efforts and its adjustment as well as the ongoing reform process. He said capacity building was being provided to various ministries, government departments and agencies as well as the central bank.

“Key areas of support are tax administration and policy, public financial and debt management, financial stability and data compilation and dissemination,” Beddies said.

Due to a recent decline in tax collection as a percentage of Gross Domestic Product (GDP), government has prioritised tax policy as stated by Finance minister Patrick Chinamasa and Reserve Bank chief John Mangudya in their letter of intent written to IMF in November last year.

“Going forward, we plan to rationalise the tax expenditure regime, we also plan to review the design of our tax system with a view to making it more business-friendly and to halt the recent slide in tax collection as a percentage of GDP. For this purpose, we intend to request fund technical assistance,” read the letter of intent.

Chinamasa and Mangudya also mentioned that they planned to implement recommendations of the Afritac South technical assistance mission focusing on improving risk mitigation techniques in customs.

Afritac South, based in Mauritius, is one of eight regional IMF technical assistance centres in the world and offers capacity building services to IMF member countries in its core areas of expertise, including public financial management, revenue administration, financial sector supervision and real sector statistics.

Beddies said despite the increasing economic and financial difficulties, the authorities have demonstrated strong commitment by implementing legal reforms to start addressing some of Zimbabwe’s deep-seated structural issues.

The various Bills that have been tabled in parliament include the Public Finance Management Act, Procurement Act, Banking Act, Labour Relations Act, Income Act, and a new Public Debt Management Act.

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