Chinamasa set for Washington

via Chinamasa set for Washington – DailyNews Live by John Kachembere  4 APRIL 2014

Finance minister Patrick Chinamasa will next week travel to Washington, United States, to attend the International Monetary Fund (IMF) spring meetings.

The Treasury chief — struggling to secure bailout packages and budgetary support — said he would use the platform to lure investors into investment-starved Zimbabwe. He acknowledged that foreign investors were critical for economic development.

“The idea is that we lure investors into this economy,” Chinamasa said at the Atlas Mara Co-Nvest Limited and ABC Holdings press conference, adding that “what we (Zimbabwe) need basically is a large volume of money being lent to the productive sectors such as agriculture, mining, industry, manufacturing and tourism.”

Last October, Chinamasa returned empty-handed from Washington after the IMF and the World Bank refused to advance further financial support to the country.

According to IMF, Zimbabwe’s external debt reached $12,5 billion in 2012 with nearly half of the obligations in arrears.

In June last year, the organisation re-engaged with the country for the first time in more than a decade, but ruled out new cash advances.

Instead, it recommended a Staff Monitoring Programme (SMP) for the country adding its successful implementation “would be an important stepping stone toward helping Zimbabwe re-engage with the international community.”

“We still owe them money, and because of that they have put us under the Staff Monitoring Programme and they will not be giving us fresh money or new concessionary loans until we complete that programme,” Chinamasa said following his October IMF visit.

Meanwhile, Zimbabwe could for the second time miss the SMP targets due to deteriorating economic conditions in the country.

Under the programme, the country is required to enforce sound economic policies including improving diamond revenue transparency, reduce financial sector vulnerabilities and restructure the central bank, among other demands.

In January, IMF approved a six-month extension of the SMP to June to give the President Robert Mugabe-led administration time to deliver on outstanding commitments.

Chinamasa has said government is facing mounting economic challenges thereby affecting its ability to meet the Bretton Woods institution’s targets within the deadline.

“It’s clear at this stage, to everybody’s knowledge, that we have not been able to address some of the issues we discussed last year such as employment costs as a proportion of the budget,” he said.

“And I have told them (an IMF team recently in Zimbabwe) that with respect to employment costs we cannot address those in the short to medium term. They require a longer process,” Chinamasa said, adding that the issues could not be addressed overnight.

He said he was not willing to cut government expenditure through the retrenchment of civil servants.

“We are hoping to address employment costs in the long term through creating growth in the economy, increasing the revenue base and increasing the gross domestic product (GDP) so that employment costs can take their appropriate portion within a bigger cake.”

 

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