IMF Urges Zimbabwe to Boost Transparency in the Diamond Sector

via Diamonds.net – IMF Urges Zimbabwe to Boost Transparency in the Diamond Sector June 24, 2014 by Jeff Miller

The International Monetary Fund (IMF) stated that Zimbabwe remains  committed  to implementing the policies and reforms that were agreed to with an IMF-monitored program and to stay engaged with international financial institutions. The program marked its first anniversary this month and while the IMF suggested a number of guidelines to stabilize Zimbabwe’s economy, the organization also concluded that the government must fully implement controls to boost transparency in the diamond sector and to modernize mining legislation.

One measure the country implemented following general elections in July 2013, was to drive sustainable development and social equity through a new five-year development plan, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZIM ASSET).  Nonetheless, the IMF found that progress on its monitored program  has been mixed, reflecting a long electoral process coupled with a protracted post-election transition. But the monitor’s progress report indicated that Zimbabwe is interested in a successor monitor to build on  achievements this past year and to support a stronger policy framework moving forward.

The IMF projected Zimbabwe’s real gross domestic product (GDP) to grow 3.1 percent to an estimated $13.5 billion in 2014, which is a slightly lower rate of growth from this past year. Zimbabwe’s GDP growth jumped 11.9 percent in 2011 and rose 10.6 percent in 2012 before cooling to 3.3 percent in 2013. The IMF assumed a  medium-term outlook for growth at an average of 4 percent as large mining sector investments reach full capacity. Zimbabwe’s current account deficit is expected to improve but it will remain high, averaging 15 percent of the GDP.  Zimbabwe’s  current account deficit widened to 28.7 percent of the GDP in 2013, as the trade deficit deteriorated due to lower mineral exports.

Zimbabwe faces serious medium-term challenges and achieving sustainable, inclusive growth will require strong macroeconomic and financial policies, an enabling business environment and normalized relations with its creditors, according to the IMF report.   IMF directors encouraged Zimbabwe’s government to  implement a revised fiscal plan for 2014 and to be ready to take additional action if needed, while protecting priority infrastructure and social spending. They highlighted the need to mobilize revenue, including that from the diamond sector.

The directors also advised the government to  improve debt management and supported the strategy to seek mainly grants and highly concessional resources, while limiting non-concessional financing to critical development projects with the greatest  economic returns. The IMF concluded that enhancing financial sector stability is a top priority for Zimbabwe and restructuring and recapitalizing the Reserve Bank of Zimbabwe would help mitigate financial vulnerabilities.  The IMF supported plans to preserve the multicurrency system for the time being, but noted that the real exchange rate is overvalued.  Directors also saw a need to reduce uncertainty regarding the indigenization policy, including in the financial sector, to avoid deterring investment.

Zimbabwe’s economic position remains fragile,  with usable international reserves covering less than two weeks worth of imports, according to the IMF.  Zimbabwe’s financial sector is carrying  high levels of nonperforming loans, representing an average of 16.6 percent for banks, along with low capitalization and low liquidity.

COMMENTS

WORDPRESS: 3
  • comment-avatar

    So, no money from them

  • comment-avatar
    zanupf fear me 8 years ago

    Zanupf believes it is phantastic cabal which doesn’t heed or need sound advice. Let the village idiots fall on their Chinese swords

  • comment-avatar
    Shamhu YeNhanzva 8 years ago

    “Transparency” is a word that’s inexistent in the ZANU dictionary. Any time you bring up that word you will probably be met with some kind of accident. Like a “random” traffic accident with an army vehicle.