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Busines Reporter
ZIMBABWE should be more consistent in policy implementation if the country is to attract balance of payments support from the international community.The international business community and multilateral institutions have pointed to the importance of policy consistency and implementation.
Finance and Economic Development Minister Patrick Chinamasa told The Herald Business breakfast meeting yesterday that it is critical for Zimbabwe to abide by its policies.
The breakfast meeting ran under the theme “Rebuilding the Zim-IMF Relations” and was graced by the International Monetary Fund Head of Mission to Zimbabwe Mr Domenico Fanezzi.
He said Zimbabwe owes multilateral institutions about $2,582 billion in debt. Of that, $1,6 billion is in arrears, which means that the total principal debt is in arrears.
“When we engage the IMF for fresh money, they say we cannot give you fresh money because you have run up this debt,” said Minister Chinamasa.
“Then they ask what we are going to do, build capacity to pay debt and access benefits, then we tell them that we are going to carry out structural reforms, amendments to the Mines and Minerals Act, reforms in the public debt management, meaning that we are not going to run up new loans at commercial rates. We will limit ourselves to concessional borrowing,” he said.
On quantitative benchmarks, Zimbabwe promised to build up its reserves, and will ensure there is social spending to the poor.
“All those things that you tell them (IMF) you are going to do become the Staff Monitored Programme so the policies are ours. The IMF then said in order to build this relationship towards engagement to the stage where you can access benefits, we will monitor you. So this is why they are here,” said Minister Chinamasa.
Zimbabwe has not been able to honour its obligations to the multilateral institutions.
“That is why I always say it is very important for us to abide by our policies and we implement,” the minister said.
Head of mission to Zimbabwe Mr Fanezzi said that the team is in the country to show that the country can implement policies that could eventually justify a financial programme with the fund.
“The mission is here to show that the country has capacity to make the policy steps that could justify our support in financial terms,” said Mr Fanezzi.
In December last year, the Government requested a six-month extension of the SMP until June 2014, as well as modified quantitative targets for end-December 2013. The additional six months would allow the country time to strengthen its policies and deliver on outstanding commitments under the programme.
The SMP focuses on putting public finances on a sustainable course (while protecting infrastructure investment and priority social spending), strengthening public financial management, enhancing diamond revenue transparency, and reducing financial sector vulnerabilities, including by restructuring the balance sheet of the Reserve Bank of Zimbabwe.
In a Letter of Intent to the IMF in July, the Government indicated that it had met three of the six revised quantitative targets — the floor on usable international reserves, the floor on payments to the PRGT and the continuous ceiling on new non-concessional borrowing.
The IMF said Zimbabwe’s performance under the SMP has been broadly satisfactory and the Government has taken corrective measures to restore a track record of policy implementation going forward.
Online Reporter