IMF team jets in for SMP talks

THE International Monetary Fund (IMF) has dispatched a team to Zimbabwe to undertake a two-week annual Article IV Consultation and also begin talks on a supervised economic reform plan, Staff Monitored Programme (SMP).

The IMF visit comes at a time when the economy is battling rising inflation on the back of a sharp depreciation of the local currency. The Zimbabwe dollar lost over 60% of its value last month alone.

This has resulted in the erosion of business and consumer incomes, as well as a rise in the cost of doing business.

Treasury made the announcement of the IMF team’s visit in a statement last Friday.

“A team from IMF led by Mr Wojciech Maliszewski Mission Chief for Zimbabwe this morning paid a courtesy visit to the Finance minister Hon Mthuli Ncube and his Deputy Hon D.K. Mnangagwa,” Treasury said, in a post made on its official X account.

“Hon Minister Ncube appraised the team on the state of the economy and various policy interventions being taken by the government to ensure economic growth. The team is in the country for two weeks to undertake an Article IV Consultation and Staff Monitored Programme Request Mission. IMF will conduct a comprehensive consultation with various stakeholders.”

Under Article IV, a staff team visits a member country, collects economic and financial information and discuss with officials on the country’s economic developments and policies.

Zimbabwe wants an IMF SMP to help anchor its arrears clearance and debt resolution plan.

The arrival of the IMF team comes at a time when the government is currently working with an underfunded national budget of ZWL$60 trillion for the current fiscal year, against initial requests of ZWL$110 trillion.

Treasury cannot afford the preferred budget as most of the economy is now informal with estimates pointing to a 70/30 split between informal and formal economic activity.

In a budget analysis last Friday, the Zimbabwe Coalition of Debt and Development (Zimcodd) said the national spending plan demanded answers on how resource allocations were made.

“Trends in budget allocations and spending give rise to some key questions begging answers from policy communities. Were the 2024 budget allocations influenced by the nature and manner used to conduct the budget consultative forums and public hearing? Does the top 10 MDAs [ministries, departments and agencies] recipients in the 2024 national budget and top 10 utilisers in the 2023 national budget really reflect national priorities? Who sets and decides these ‘national priorities?” Zimcodd queried.

“Is there national consensus on the ‘top government priorities? Are there political interests vested in resource allocation through budget process? Could it be that priorities of incumbent governments are self-serving and meant to consolidate power and status quo? Is democracy so skewed that at voting citizens relinquish all power and decision making to authorities to make decisions on resource allocation entirely at their discretion?”