IMF urges ‘bold reforms’ as crisis deepens

Source: IMF urges ‘bold reforms’ as crisis deepens – NewZimbabwe  04/05/2016

THE International Monetary Fund has urged “bold reforms” to revive Zimbabwe’s economy after drought cut agricultural production and disrupted hydropower generation.

Zimbabwe is facing risks to the already difficult economic outlook mainly from the prolonged adverse weather conditions, weak commodity prices and policy implementation in a difficult political environment, the IMF said in a statement after a board meeting on Monday.

“Zimbabwe’s economic difficulties have deepened. Drought, erratic rains, and increasing temperatures, have reduced agricultural output and disrupted hydropower production and water supplies.”

The statement followed the 2016 Article IV Consultation with Zimbabwe and third review under the Staff Monitored Programme.

It said economic activity is severely constrained by tight liquidity conditions resulting from limited external inflows and lower commodity prices.

“Inflation remains in negative territory, because of the appreciating U.S. dollar—the country’s main currency—and lower commodity prices. Zimbabwe remains in debt distress and the level of international reserves is low,” said the IMF.

“Unless the country takes bold reforms, the economic difficulties will continue in medium-term. Given the outlook for the global economy, growth is projected to remain below levels needed to ensure sustainable development and poverty reduction. The current account deficit is expected to narrow, but remain high over the medium term, financed mainly by loans to the private sector.”

The IMF team was in Zimbabwe in February.

Zimbabwe met its commitments under the SMP that ended in December last year, which has been a useful anchor in a difficult macroeconomic and political environment, the Fund said.

The SMP focused on implementing a limited number of key reforms to show that the country has the capacity to implement the kind of reforms that would be required for a Fund-supported programme.

The strategy to clear external arrears to the international financial institutions (IFIs) and reforms, once implemented, should provide positive signals to investors and creditors, and help unlock external flows to finance the authorities’ development plans and private sector-led growth, the Fund said.

Zimbabwe has said it expects to clear its $1,8 billion arrears with the African Development Bank (AfDB), the World Bank and the International Monetary Fund (IMF) by June this year and expects fresh funding from the IFIs before the end of the year.

Timely implementation of measures to curb the wage bill and continued progress in State-Owned Enterprise (SOE) reforms would be needed to lower employments costs, the Fund added.

COMMENTS

WORDPRESS: 3
  • comment-avatar
    Joe Cool 6 years ago

    Can anyone elaborate on this drought issue? The rains came late, but I see no signs of drought anywhere. The grass is long and green and the rivers are flowing.

    Is this not just another scapegoat, like the continuing ‘illegal Western sanction’?

  • comment-avatar
    reader 6 years ago

    Joe Cool, yes late and less than expected but again as you state we have not gone dry. The rains from north of Zimbabwe were reasonable and are just about to arrive in Kariba, it wont fill but certainly lift the water table quite a lot. Mtlikwe has gone from 10% t0 20% and still rising most other dams are well over 50% or more.

    Problem we have is Mismanagement lack of knowledge and corruption.
    we had more sever droughts than this before and managed remember 1992/3 and we still exported record amounts of Tobacco, Maize, Sugar and Minerals.
    Now to create more poverty we start printing our own money.
    these are really dispicable people on an out of control ferris wheel and they have no way or plan of how to stop it and get off.

  • comment-avatar
    IAN SMITH 6 years ago

    1)It is all about GENOCIDE WITH IMPUNITY , MASSIVE CURRENCY THEFT BY ZANUPF INDUNAS
    2)THE DONOR’S MONEY IS STASHED IN FOREIGN BANKS GOING BACK 36 YEARS.
    3)DISPLACING THOUSANDS OF EXPERIENCED FARM EMPLOYEES AND FAIR SKINNED MANAGERS OF THE LAND????