Zimpapers Logo

Finance and Economic Development Minister Patrick Chinamasa stresses a point during a press briefing with IMF mission head Mr Domenico Fanizza (right) while RBZ Governor Dr John Mangudya (left) looks on

Conrad Mwanawashe Business Reporter
ZIMBABWE is dispatching a team to key European capitals to present its strategy on dealing with debt arrears to the Paris Club creditors. The team, which is led by Reserve Bank of Zimbabwe Governor Dr John Mangudya, will visit Paris (France), Brussels (Belgium) and Berlin (Germany) before the end of this month.

Head of the IMF mission in the country for the second review of the Staff Monitored Programme Mr Domenico Fanizza said Zimbabwe has intensified efforts towards re-engagement with the international financial community.

“They have developed a proposal for a strategy for resolving Zimbabwe’s external arrears to the international financial institutions for which they intend to seek support from creditors at a dedicated stakeholders meeting (to be held on the sidelines of this year’s Annual Meetings of the IMF and the World Bank in Lima, Peru). Their resolve in this area is commendable,” said Mr Fanizza.

He was addressing a joint press briefing following the conclusion of the second review of the SMP with the Minister of Finance and Economic Development Patrick Chinamasa.

Minister Chinamasa said in preparation for the Lima meetings, he has tasked the team led by Dr Mangudya to visit three key European capitals to sensitise creditors on the economic situation in Zimbabwe.

“To this end and in preparation for that Lima meeting and in order to ensure that we have some appreciation and buy in from our creditors I’m sending a team to visit Paris, Berlin and Brussels and it will be headed by the Governor of the Central Bank Dr Mangudya,” said Minister Chinamasa.

“This is essentially to sensitise the creditors on the economic situation that is confronting us as well as the strategies that we are hoping to promote in Lima,” he said. The IMF also said Zimbabwe has taken important steps to strengthen the financial sector and liberalise the labour market.

“They have prepared plans to rationalise public expenditure and reduce public sector employment costs. However, these reforms will require time and deeper efforts before their beneficial impact is felt on the economy. We are pleased that the authorities met all quantitative targets and structural benchmarks for the second review, and two structural benchmarks scheduled for the third review under the SMP,” said Mr Fanizza.

Economic difficulties intensified this year and growth has slowed more than anticipated and is expected it to remain weak in 2015 but Government is committed to laying the foundation for sustained strong, private sector-led growth. The policy reform agenda for the remainder of the SMP includes areas such as mitigating the impact of this year’s adverse shocks on the external position and growth. The IMF said Government plans to further reduce the primary deficit and to achieve balance by 2016.

“This will help increase international reserves, despite the worse-than-expected global and domestic environment. The top priority remains to reduce public sector employment costs to make room for (a) much-needed capital spending to raise growth; and (b) social spending to protect the poor,” said Mr Fanizza.

Completing the recapitalisation of the RBZ will enhance its ability to supervise the banking sector. There are no longer any distressed banks, all banks now fully comply with capital requirements, non-performing loans have declined, and the interbank market is now functioning. As a result, banks are now in a better position to extend credit to the private sector, which should help economic activity.