Economic situation still ‘very difficult’ in Zim, says IMF chief

INTERNATIONAL Monetary Fund (IMF) mission chief for Zimbabwe, Gene Leon, said yesterday the economic situation in Zimbabwe remains “very difficult”.

In a statement, Leon said: “While growth in 2017 will be boosted by the bumper harvest due to the exceptional rainfall, the challenge is to sustain growth going forward in a context where macroeconomic stability is threatened by high government spending, the foreign exchange regime is untenable, and the pace of reform inadequate.

“Excessive government spending, financed by the central bank creating money, has exacerbated macroeconomic imbalances and amplified the impact of a dollar cash scarcity, with an adverse impact on inflation and potentially jeopardising the financial sector.”

Leon added: “Immediate action is critical to reduce the deficit to a sustainable level; accelerate structural reforms; and re-engage with the international community to access much needed financial support. All the elements in this three-pronged approach are essential.

“Without adjustment, reform, and re-engagement, the structural issues will not be addressed.”

According to the IMF, Zimbabwe has cleared its arrears to the IMF and is in good standing with the fund. “However, consideration of any future request for IMF financing would also require Zimbabwe to comply with other applicable IMF policies, including to: resolve arrears to the World Bank, African Development Bank and the European Investment Bank; get a commitment from bilateral creditors that they would provide debt treatment to Zimbabwe; and be ready to implement strong macroeconomic policies and structural reforms to restore fiscal and debt sustainability, promote external sustainability, and rebalance the economy towards one where growth is driven by the private sector and for the benefit of all Zimbabweans.”