THE International Monetary Fund (IMF)’s Africa department deputy director has said Zimbabwe needs to put in place proper structures that encourage investment to resuscitate its aili
According to a transcript of last Thursday’s briefing, Siddharth Tiwari described Zimbabwe’s inflation targets as highly ambitious. He encouraged Zimbabwe to integrate itself into the international community as a matter of urgency.
“They need to bring inflation down. The authorities’ objective is to the 60% range. It’s ambitious, it’s very ambitious, but they need to start in that direction. There are no two ways about it. Structural policies and investment climate is at the heart of the issues in Zimbabwe.
“The other side of this is that Zimbabwe needs to integrate itself with the international community. It’s a two-way street. It’s from Zimbabwe to the rest of the world, but also the rest of the world to Zimbabwe.”
Tiwari said the re-integration with the international community will not happen until Zimbabwe does something to address economic policies at home and improve living standards.
“I think there is a lot of goodwill in multilateral institutions and bilateral countries to help Zimbabwe, but they need to make the first move.”
Zimbabwe has been isolated from the rest of the world since 2002 when the United States government and the European Union imposed targeted sanctions against Zimbabwean leaders.
Tiwari said government also needed to come up with a comprehensive plan to revive the economy which has plunged by more than 30% over the past five years.
“I was there (Zimbabwe) late last year. A mission has been there since then. And the authorities know that they need to implement one comprehensive programme that revives economic activity in Zimbabwe. It’s declined to over 30% in the last few years,” Tiwari said.
He however said the Zimbabwean authorities had expressed a desire to turn around the economy.
Between 1999-2003 the country’s gross domestic product has shrunk by 28,4%, while the government feels that the decline has been arrested.
Economists expect GDP to drop by between 2,5 and 8,5% this year. The Reserve Bank of Zimbabwe governor Gideon Gono said he expects a GDP increase of between 3,5 to 5%.
In his Independence Day speech, President Robert Mugabe conceded that the economy had suffered a severe knock over the years.
Zimbabwe’s investment climate suffered a battering when the government sanctioned the farm invasions in 2000. It has been ranked among the worst investment destinations in the world together with Iran and Afghanistan.
In February the IMF executive board put on hold Zimbabwe’s expulsion from the fund but insisted that Harare repay its debt. Currently, Zimbabwe owes the fund US$301 million.
“There are a series of sanctions that the membership has agreed to impose on countries in arrears to the fund, the final stage of which is the managing director’s Complaint on Compensatory Withdrawal, and that’s where Zimbabwe is,” he said.
“There was an improvement in 2004, but went short of comprehensive adjustment. Given the severity of the sanctions, the board has given Zimbabwe and us (Africa department) another six months to consider it.”