No loans soon for Zimbabwe

Costly economic reforms needed – IMF

IT will be at least three years before Zimbabwe can get loans from international lenders, and the country needs to strengthen its economic reforms to make sure it can repay its debt, the International Monetary Fund (IMF) has said.

The head of a visiting IMF mission, Domenico Fanizza, said yesterday no quick and easy fixes existed for Zimbabwe’s economy.

What was needed were costly reforms that would take time to be felt by ordinary citizens, he said.

The country owes foreign creditors $9-billion (R123-billion) and has been struggling for five years to recover from a catastrophic recession, widespread food shortages and hyperinflation.

Fanizza said Zimbabwe was doing well under an IMF monitoring programme meant to instil fiscal and financial discipline, rebuild trust with foreign creditors, and allow the country to present plans to clear its arrears.

The programme ends in December.

“Then the next step, together with the government, is building this credible, more ambitious reform programme that tries to tackle the underlying problem of the Zimbabwean economy,” Fanizza told a meeting of government officials, industry executives and western diplomats in the capital Harare.

“This will be a three-year programme, and would be the moment in which the capacity of Zimbabwe to finance itself on international financial markets and from this institution [IMF] could happen again.”

The IMF and the govern- ment have cut Zimbabwe’s growth forecast to 1.5% this year from 3.1% last year, blaming drought and weak commodity prices.

President Robert Mugabe’s government began defaulting on its debt to the IMF and several lenders in 1999.

Gross domestic product shrank by 45% during the decade to 2008.

Zimbabwe dumped its worthless currency in 2009 and adopted the US dollar, but the strengthening greenback has left the country vulnerable to cheap imports, especially from South Africa, as the rand has weakened.

Local industry has been hardest hit.

Bankers’ Association of Zimbabwe head Somkhosi Malaba said: “Going into 2016 . . . [we] expect normal to below-normal rains. If these trends continue, we are heading for recession.”