A delegation from the International Monetary Fund is expected in Zimbabwe tomorrow to assess progress made in implementing its staff-monitored programme and mapping ways to clear the country’s debt. According to Finance and Economic Development Minister Patrick Chinamasa, the team would be in the country for two weeks until November 19.
“When we committed to the staff-monitored programme, there were certain benchmarks that the IMF said we should comply with. One of those was to amend our Mines and Minerals Act and we have not yet completed the process,” he said.
He said the IMF had also suggested that the Budget be reviewed so that more funds were allocated towards capital to get the economy running again instead of going to wages.
“Currently, our Budget is skewed towards wages because 70-80 percent is going towards paying wages for civil servants and we are working on ways to restore balance in our Budget,” he said.
Minister Chinamasa said the engagement would also present Government with an opportunity to ask for new money considering that the country was complying with the benchmarks.
Zimbabwe, which agreed to the IMF staff-monitored programme in June this year, is saddled with a US$11 billion external debt. This has been standing in the way of accessing fresh funding as institutions that are owed have demanded that the country clear its debt before getting fresh assistance.
However, in October last year the IMF eased restrictions on technical assistance to Zimbabwe, opening the way for an IMF staff-monitored economic programme which the country committed to in June this year. The move marked a major step towards normalising relations with Zimbabwe.
The staff-monitored programme is supposed to help monitor the country’s economic data, build transparency in diamonds earnings and determine whether the country is able to meet its macro-economic targets such as inflation.
While the country is faced with many problems, lack of access to affordable medium- to long-term funding is the major challenge. The country needs at least US$8 billion to kick-start the economy.
The external debt is also blocking capital for infrastructure and economic programmes. Minister Chinamasa said the Government would continue engaging creditors in order to find ways to clear the debt and be able to access new money.
“We will continue to tell them we need new money to broaden the tax base so that we can start paying our creditors,” he said.
Zimbabwe owes the Paris Club about US$3,5 billion, the World Bank US$2 billion, African Development Bank US$600 million and IMF US$200 million.
Clearance of arrears will unlock new financing arrangements from the IMF within the context of a fund-supported financial arrangement, which will then be used to repay the bridging loan obtained from the co-operating partners.