HARARE, October 2 (The Source) – The International Monetary Fund (IMF) says Zimbabwe’s ‘strong commitment’ to ongoing economic reforms and determination to resolving arrears with the international community could open up the country to financial support.
The southern African country owes foreign creditors about $10 billion and will present and seek support for its strategy for arrears clearance on the sidelines of the annual meetings of the World Bank and the International Monetary Fund in Lima, Peru, next week.
The IMF said strong support at the Lima meetings and a successful completion of the Staff Monitored Programme (SMP) — an informal agreement between a government and IMF staff to monitor the implementation of its economic reforms — coupled with a deepening of ongoing reforms would set the stage for advancing the reengagement process with the international financial institutions and bilateral creditors, which could pave way for new funding.
“Further advancing the ongoing reforms and re-engaging with the international community could reopen Zimbabwe’s access to financial support and lift the economic outlook,” the IMF said in a statement late Friday.
“Despite increasing economic and financial difficulties, the Zimbabwean authorities have demonstrated strong commitment to the programme by taking important steps to advance their macroeconomic and structural reforms.”
The IMF, whose team visited the country to assess progress under the SMP last month, said Harare had made significant progress in implementing reforms, particularly in the financial sector and labour market.
“The authorities continue to see the SMP as a crucial tool in building a strong track record toward normalizing their relationship with creditors, mobilizing development partners’ support, and for supporting macroeconomic policies and laying the foundation for addressing Zimbabwe’s deep seated structural issues,” said the IMF.
The country’s economy remains in a precarious state with growth forecast having being halved to 1,5 percent following a devastating drought in addition to falling commodity prices, of which Zimbabwe is a primary exporter.
Zimbabwe’s economic fundamentals remain poor and 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 U.S. dollar, external inflows remain highly constrained, the levels of international reserves very low, and the country is in debt distress,” said the IMF.
Risks to the outlook stem mainly from fiscal challenges, weak global commodity prices, adverse weather conditions, and policy implementation in a difficult political environment, it added.
The IMF said it will continue to support Zimbabwe’s economic reforms and their pursuit towards arrears clearance and debt relief.