New IMF reform plan on cards

via New IMF reform plan on cards – NewsDay Zimbabwe September 11, 2015 by Victoria Mtomba

The International Monetary Fund (IMF) will work with government to develop a comprehensive reform plan after the conclusion of the Staff Monitored Programme (SMP), which is up for a final review next year, the global lender has said.

Zimbabwe is under a 15-month successor SMP, which will be reviewed next year having met the quantitative targets in the first and second reviews. The SMP was put in place to improve the country’s track record and re-engage with creditors on resolving the $8,4 billion debt.

IMF head of delegation to Zimbabwe Domenico Fanizza told a roundtable discussion held in the capital yesterday that his team will come again in February next year for a third review and have agreed on the policies with authorities.

The roundtable discussion was titled Economic Prospects for Zimbabwe and the Re-engagement Process.

“We believe if this commitment is maintained it will unleash the huge potential of Zimbabwe. What we need is to be in a position to develop a comprehensive reform programme, with basically two things: If we conclude successfully the SMP we will have the third review that will take place in February/March next year and we have agreed on the policies to be followed and that will be an important moment; then the other issues, is the issue of arrears with international financial institutions,” he said.

Government is preparing for next month’s IMF/World Bank meeting in Lima, Peru, where it will seek creditors’ support to clear arrears amounting to $1,8 billion.

The plan has to be approved by creditors.

Fanizza said once arrears are cleared a new plan would be developed.

“When this is done then the next stage is working altogether with government in building a credible and more ambitious reform programme to try to tackle the underlying problems of the Zimbabwean economy. This will be a three-year programme and that will be a possible debt treatment with financial creditors,” Fanizza said.

His hope was that Zimbabwe would get a favourable response from creditors at the Lima meeting.

Fanizza said Zimbabwe needs to catch up with rest of the world as it has been lagging behind for over 20 years and has not been part of the continent’s rising story.

Fanizza said if the country continues with the commitment it had for the first and second review of the SMP, then this could change the dynamics of the Zimbabwe economy.

Finance and Economic Development minister Patrick Chinamasa said if the engagement process is successful the country will start enjoying benefits of being a shareholder in the African Development Bank, World Bank and the International Monetary Fund.

He said parastatal reform needed to be looked at, as State enterprises were not contributing anything meaningful to Treasury.
He said there was need for more investments in the agricultural sector as 75% of the population lives in rural areas.

Chinamasa said other countries have been “traumatised” by the IMF and the country’s engagement with the institution has been candid and the targets that were being met in the SMP are crafted by Zimbabwe.

“I heard arguments that the IMF traumatises countries. But for me we have not been traumatised, what we are doing is what we should have been doing with or without IMF. Whether in the future I will be traumatised, let’s wait and see.”

He was responding to comments made by Brazil’s Ambassador to Zimbabwe Marcia Maro da Silva that IMF policies traumatised some nations.