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IMF team to arrive next month

Godfrey Marawanyika

THE International Monetary Fund (IMF) team will arrive in the country next month for Article IV consultations, a month after Zimbabwe’s parliamentary election.

The IMF team is set to arrive on May 3 and depart on May 16.

During its visit, the IMF team will meet Zimbabwean authorities on issues pertaining to the Zimbabwe Allied Banking Group and the National Oil Company of Zimbabwe (Noczim).

On Noczim, the fund will discuss the issue of external debt arrears, import of fuel, operating results and restructuring.

The IMF delegation will comprise Sharmini Coorey (head of delegation), Paul Heytens, Sonia Munoz and Sanket Mohapatra.

Article IV consultations are held by the fund with each member country. During the visit the Washington group will meet with officials from the Reserve Bank of Zimbabwe, the Ministry of Finance, the Zimbabwe Congress of Trade Unions, the Confederation of Zimbabwe Industries, the Central Statistical Office and the opposition MDC.

The Coorey-led team is expected to discuss monetary and exchange rate developments, capital markets and concessional lending with the central bank and Ministry of Finance and Economic Development officials.

On May 4, the IMF is expected to meet with central bank governor Gideon Gono.

On May 5, the fund will meet officials from the Grain Marketing Board and the newly-established Agricultural Marketing Authority.

During its last visit in September last year, the IMF noted that fiscal operations were almost balanced in 2003, but said the 2004 budget was expansionary, with a deficit target of 7,3% of gross domestic product.

The mission noted that expenditure fell sharply in real terms in 2003 as wages were eroded by inflation while the domestic interest bill declined owing to negative real interest rates. It said other government spending was constrained by shortages of foreign exchange and weak administrative capacity.

During the first quarter of last year, the budget deficit rose to 13,4% largely because of a 220% wage increase in January and “a catch up in current and capital spending”, the IMF said after its visit.

The external current account deficit narrowed to 6% in 2003 from 7,3% in 2002.

“In the absence of foreign financing, arrears continued to accumulate to reach US$2,1 billion or 44% of external debt,” the IMF said.

“The average exchange rate in the economy strongly appreciated in early 2004. This resulted from the introduction of a heavily managed foreign exchange tender system in January and the clamping down on the parallel market, where the bulk of foreign exchange transactions took place in 2003.”

On May 11, the IMF will meet with officials from the Zimbabwe Electricity Supply Authority to discuss the power utility’s external debt and other arrears.

The same day, the fund is also set to meet with Zimbabwe Stock Exchange boss, Emmanuel Munyukwi.

On May 13, the IMF will meet with the Office of the President to discuss the issue of land reform, anti-corruption and anti-monopolies.

In February, the IMF’s executive board spared Zimbabwe from expulsion but noted the country’s payment of US$16,5 million since the last review which it said fell short of stabilising its arrears with the Bretton Woods institution.

The board noted the authorities’ intention to further increase payments to the IMF from the second quarter of 2005, and urged Zimbabwe to resolve its overdue financial obligations to the IMF.

Zimbabwe has been in continuous arrears to the IMF since February 2001.

As of February 15 this year, Zimbabwe’s arrears to the IMF amounted to Special Drawing Rights 202 million (US$306 million) or about 57% of its IMF quota.

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