IMF LAYS DOWN THE LAW FOR POST-MUGABE ZIMBABWE
HARARE - Even before Emmerson Mnangagwa was inaugurated as president last Friday, the International Monetary Fund (IMF) issued a list of demands that post-Mugabe Zimbabwe must meet before being reconsidered for financial aid packages.
On Thursday, Reuters was told by IMF mission chief for Zimbabwe Gene Leon that, "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."
The first task is to address 'excessive government spending, the central bank creating money and potentially jeopardising the financial sector.'
This means that deficit reduction has to happen through cuts and accelerated 'structural reforms' to restore fiscal and debt sustainability and to rebalance the economy towards one where growth is driven by the private sector. This means that there needs to be more cuts to the public sector as well as privatisation.
Before re-engaging with the international community to access much needed financial support, Zimbabwe, which has already paid its arrears to the IMF, must also pay off arrears to the World Bank, the African Development Bank (AfDB) and the European Investment Bank accrued since international aid was cut off in 1999.
The debt amounts to US$1.4 billion to the World Bank, US$600 million to the AfDB and $9 billion as of October to the IMF, World Bank and African Development Bank.