adminIt said at the conclusion of Article IV consultations on Zimbabwe that the government should strengthen fiscal management, reduce financial sector vulnerabilities, improve the business environment as well as address concerns on the indigenisation and economic empowerment programme to achieve sustained and inclusive future growth.
“Executive directors welcomed Zimbabwe’s economic recovery and stabilisation in recent years. Progress has, however, been uneven, and the impact of adverse weather conditions on agriculture, an uncertain political situation ahead of elections, and a difficult global environment pose further risks to the outlook,” the IMF said.
With a number of factors chief among them lack of funds, threatening to cripple economic recovery, the IMF said the government should contain its wage bill growth to create space for social and public investment.
However, with civil servants agitating for a salary increase which has not been awarded since the beginning of the year, the IMF’s recommendations might prove problematic for Finance Minister Tendai Biti, who has had to deal with strike threats in the past few months.
The IMF also said improving the business climate was necessary to strengthen competitiveness, build investor confidence, and boost growth potential.
“Foreign investment is likely to be hampered by a poor business climate, uncertainties over the implementation of the indigenisation policy and political instability, while domestic investors may face difficulties accessing long-term credit,” it said.
“A vigorous programme of structural reform and strengthened macroeconomic management would allow the country to sustain higher rates of growth.”
Other outstanding issues that should be resolved include the restructuring of the Reserve Bank of Zimbabwe, the country’s ballooning external debt which stands at $10.7 billion and finalisation of the Diamond Act, which aims to put measures to control the mining and sale of the precious mineral.
The government has already announced measures targeted at addressing some of the IMF’s concerns although what remains is implementation of the initiatives.—New Ziana.
Online Reporter