|Following the yearly bilateral discussions which took place in early May this year between the International Monetary Fund (IMF) and the Zimbabwe representatives (including senior government officials, members of parliament, representatives of the private sector, civil society and development partners), the IMF has now published its Staff Report for the 2017 Article IV Consultation on Zimbabwe.
The report notes that Zimbabwe's economy is facing difficulties, with high expenditure levels despite what it termed "subdued revenues".
The report mentions that some progress has been made on structural reforms, noting, though that these have been slow, particularly with regard to implementation of laws applicable to non-indigenous investors, improvements in the functioning of state-owned enterprises, and upgrades in public financial management, governance and accountability, where reform progress has been limited.
The IMF report warns that "With limited access to foreign inflows, the ensuing fiscal imbalances have become unsustainable, and are being financed by rising domestic borrowing. The expansionary fiscal stance, curtailed net capital flows, and declining investor confidence have resulted in cash shortages."
"Growth this year is expected to be supported by a strong performance in agriculture mainly due to exceptional rains. However, economic activity in the medium term is projected to remain subdued, pending adjustment and reform that tackle the structural challenges and enable the economy to restore fiscal and external sustainability and achieve its growth potential."
The IMF report stresses the urgency of structural reforms and the need to create a conducive environment for private-sector-led growth. The report also calls for "...effective implementation of reforms to provide a level playing field for domestic and foreign actors. In mining, for example, this would entail making all leases public, and avoiding contract negotiations on a case-by-case basis that depart from the established legal principles. .... Uncertainties about non-indigenous investors' options need to be eliminated by implementing the indigenization policy in a fair and measured way," says the report, lamenting the delay of "...reforms aimed at fostering expenditure discipline, strengthening transparency in the mining sector, improving the business environment, restoring confidence in the financial sector, and clarifying the indigenization policy to encourage investment."
"...To complement efforts to improve governance, steps should be taken to criminalize acts of corruption in line with the United Nations Convention against Corruption, strengthen the Zimbabwe Anti-Corruption Commission, and publish comprehensive asset declarations of high-level officials," notes the IMF report.The IMF expects Zimbabwe to have a moderate GDP growth of around 2.5 to 3.0 percent in 2017, while inflation is projected to increase to around 7 percent by the end of the year.