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IMF head of mission to Zimbabwe Mr Domenico Fanizza (second from right) makes a point during a Press conference yesterday, flanked by Finance and Economic Development Minister Patrick Chinamasa (second from left), his deputy Dr Samuel Undenge (far left) and Reserve Bank of Zimbabwe governor Dr John Mangudya (right)

Business Reporters—
Zimbabwe has met all the quantitative targets and structural benchmarks under the International Monetary Fund’s Staff Monitored Programme (SMP), IMF said after its latest review exercise of the Staff Monitored Programme. Addressing a joint Press briefing with Finance and Economic Development Minister Patrick Chinamasa, IMF head of mission to Zimbabwe Mr Domenico Fanizza said the country redoubled efforts on economic reforms to create an environment conducive for private sector investment.

“Zimbabwe met all the required targets that we set for the end-June review period. We strongly believe that Zimbabwe’s decision to re-engage international financial institutions will go a long way in instilling confidence within the country’s economy. This is a great step towards the proposed debt rescheduling,” Mr Fanizza said yesterday.

Nonetheless economic conditions remain difficult. Mr Fanizza said that economic growth had slowed down because of inadequate financial flows despite a very favourable agricultural season.

He said this and the appreciation of the South African rand, the major currency of Zimbabwe’s trading partner, caused a liquidity crunch that weakened the economy.
The IMF mission head said, Government had taken decisive fiscal measures on the revenue and expenditure sides to keep fiscal policy on track and to protect social expenditures, despite the large civil service wage increase earlier this year.

“It is encouraging that the authorities have come to the conclusion that Zimbabwe cannot address these challenges without the support of the international financial community,” Mr Fanizza said.

Minsiter Chinamasa said that Zimbabwe was prepared to work with the IMF to normalise relations with all creditors and secure solutions to its debt overhang.
“I am pleased to report that Zimbabwe met all the quantitative targets and structural benchmarks under our SMP with IMF for the period to 30 June 2014,” Minister Chinamasa said.

Quantitative targets under the SMP included budget balance for central Government, expenditure on social sectors, building international reserves, ceiling on Government guaranteed non-concessional debt of over one year tenure.

The structural benchmarks covered legislative reforms, including amendments to the Mines and Minerals Act, public debt management as well as reforms to the Banking and Reserve Bank Acts.

Minister Chinamasa said that after the successful implementation of the SMP, Government was now finalising negotiations for the successor SMP programme scheduled to run for a period of 15 months, from October 2014 to December 2015.

“The successor SMP provides for a coherent macro-economic framework that supports our effort to promote inclusive growth in line with the thrust of Zim-Asset,” Minister Chinamasa said.

Objectives of the new programme include consolidating the fiscal position, improving external position, restoring confidence in the banking sector, mobilising support for external debt, and reforming the business climate, boosting productivity, competitiveness and building confidence.

Minister Chinamasa said that Government had made its proposals for the quantitative targets and structural benchmarks under the successor SMP.
He said that Government was committed to the implementation of the reform agenda and policies under the successor SMP to expedite re-engagement with creditors, critical for debt resolution.

Consistent with Zim-Asset, Government will create fiscal space for more resources to infrastructure, education, health and other critical social services to be funded from ring fenced budget allocations to protect the vulnerable.

Further, through the 2015 National Budget, Government will create more fiscal space to cover budget demands arising from unforeseen developments. Government will also create a culture of respecting contracts and paying all its debts.

Borrowings will be targeted at projects that generate inflows from which the debts would be paid. Reforms will also be undertaken in tax policy and administration and national debt management.

Other reforms will include establishment by the Reserve Bank of a national credit bureau and recapitalisation of the central bank to improve its supervisory role and instil confidence in the banking sector.