IMF completes second review SMP with Zim

Roberta Katunga, Senior Business Reporter
THE International Monetary Fund last week completed the second review under the Staff Monitored Programme with Zimbabwe which has been described as a crucial tool for the country to normalise relations with creditors.

Zimbabwe has a $10,8 billion external debt which economists have said is the major reason why it is difficult for the country to access more offshore lines of credit, attract investors and come up with an active money market.

Economists said the external debt has been hindering economic growth. According to the IMF, the country will continue to receive support towards arrears clearance and debt relief.

“Staff will remain engaged with the authorities to monitor progress in the implementation of their economic programme, and will continue providing targeted technical assistance in order to support Zimbabwe’s capacity-building efforts and its adjustment and ongoing reform process,” said the IMF in a Press release on Friday.

The IMF noted that re-engaging the international community would re-open Zimbabwe’s access to financial support and improve the economic outlook.

As part of the conclusion of the second review, the IMF said despite increasing economic and financial difficulties, the Zimbabwean authorities had demonstrated strong commitment to the programme by taking important steps to advance their macro-economic and structural reforms.

“They have made significant progress in implementing their reform agenda, particularly in the 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 IMF noted.

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

An SMP is an informal agreement between country authorities and Fund staff to monitor the implementation of the authorities’ economic programme.