IMF optimistic of Zim support at Lima

via IMF optimistic of Zim support at Lima | The Herald October 5, 2015

The International Monetary Fund says strong support at the upcoming Lima meeting, a successful completion of the Staff Monitored Programme and a deepening of ongoing reforms will set the stage for advancing the re-engagement process with international creditors.

Zimbabwe is expected to seek support from creditors and development partners over its debt strategy for arrears clearance on the sidelines of the October 2015 annual meetings of the IMF and the World Bank in Lima, Peru.

This comes after Reserve Bank of Zimbabwe Dr John Mangudya held fruitful meetings with other creditors in Europe to drum up support for the strategy.

In a press statement to mark the completion of the Second Review of the Staff Monitored Programme, the IMF said it will continue to support Zimbabwe’s economic reforms and their pursuit towards arrears clearance and debt relief.

According to IMF the SMP as a crucial tool in building a strong track record toward normalising their relationship with creditors, mobilising development partners’ support, and for supporting macro-economic policies and laying the foundation for addressing Zimbabwe’s deep seated structural issues. The IMF noted that Zimbabwe’s growth has slowed, unemployment is rising and economic activity is increasingly shifting to the informal sector.

“The external position remains precarious. In light of their arrears to creditors, low commodity prices, and an appreciating US dollar, external inflows remain highly constrained, the levels of international reserves very low, and the country is in debt distress.”

The statement says that risks to the outlook stem mainly from fiscal challenges, weak global commodity prices, adverse weather conditions, and policy implementation in a difficult political environment. However, further advancing the ongoing reforms and re-engaging with the global community could re-open Zimbabwe’s access to financial support and lift the economic outlook.

“Zimbabwe remains committed to implementing sound macro-economic and structural policies.”

According to the IMF, despite increasing economic and financial difficulties, Government has demonstrated strong commitment to the programme by taking important steps to advance their macroeconomic and structural reforms.

“They have made significant progress in implementing their reform agenda, particularly in financial sector and labour-market reforms. In addition, they are starting to take steps to rationalise public expenditure and reduce public sector employment costs.”

The policy reform agenda for the remainder of the SMP consists of mitigating impact of this year’s adverse shocks on external position and growth; improving the investment climate; restoring confidence in the financial sector; and garnering support for a strategy to clear arrears to the IFIs.