Lifting of measures to pave way for IMF financing

Source: Lifting of measures to pave way for IMF financing – Sunday News Oct 30, 2016

Roberta Katunga, Senior Business Reporter
REMEDIAL measures imposed on Zimbabwe by the International Monetary Fund need to be lifted before the Fund provides the country with access to financing, the IMF said.

Responding to questions from journalists during a Press briefing in Washington last week, communications director Mr Gerry Rice said the settling of arrears by Zimbabwe with the Fund does not automatically provide the country with accessing to funding.

Last week, the Government cleared its arrears with the IMF of $109 million but still owes the World Bank and the African Development Bank about $1,6 billon.

Mr Rice said although he did not have details on Zimbabwe’s status of arrears with other institutions, clearance of those arrears would be an important consideration for the IMF in terms of support to the country.

“The settling of their arrears with the Fund, as you say, does not automatically provide Zimbabwe with access to IMF financing. There are a number of steps that need to be taken. It requires a decision by our Board to lift the remaining remedial measures that had been imposed on Zimbabwe because of the arrears,” he said.

On whether the IMF was aware of the country’s plans to clear outstanding arrears, Mr Rice said he did not have the details but clearing the arrears would be a critical step required by the Fund to continue with its support.

According to economist Mr Kipson Gundani, it is imperative for the country to satisfy certain conditions or targets that were set by the IMF like those under the Staff Monitored Programme (SMP).

An SMP is an informal agreement between authorities and the IMF to monitor the implementation of an economic programme.

“Such reform agendas are put in place for countries to become economically sustainable. It is important for a country to meet the policies that the IMF believes in so as to qualify to levels of economic liberalisation,” said Mr Gundani.

Zimbabwe started working on the SMP in 2014 and the IMF team reviewed the progress before the country moved to the second and third reviews. The country met targets for the SMP in the first and second reviews.

Last year when the IMF team visited the country, the head of the delegation Domenico Fanizza said if Zimbabwe succeeded in the third review, it would get a three-year credible reform programme that would tackle underlying problems in the economy.

Mr Gundani said by settling its arrears, this would unlock fresh capital for the country that is facing liquidity challenges and a deflationary environment. Last year, the Government engaged its creditors in a bid to pave way for debt clearance.