THE Deputy Minister of Finance and Economic Development David Chapfika says while it is still too early to comment on the preliminary findings of the International Monetary Fund (IMF), he fee
ls their report is “positive”.
In an interview yesterday Chapfika told businessdigest that the report was “better than the others”.
“Although it is still too early to give a concrete assessment of the whole preliminary report I think it is positive,” he said. “We have made several strides as far as trying to address the economic fundamentals and we have done quite well as far as the financial services sector is concerned. The IMF have acknowledged this in their report.”
A staff team from the IMF visited Harare from March 17-31 in connection with the annual Article IV Consultation between the IMF and Zimbabwe.
The visit was to hold discussions with the Zimbabwean authorities on the economic situation and macroeconomic policies.
The team also met with representatives of civil society such as non-governmental organisations, the business and financial communities, political parties and trade unions, as well as the diplomatic community.
While Chapfika yesterday tried to play down the preliminary findings, the IMF report made available to businessdigest made worrying reading.
The IMF said while it welcomed some of the steps taken in the 2004 national budget statement, the December monetary policy statement and subsequently, the efforts to strengthen banking supervision, government needed to accelerate and “broaden these efforts”.
“Zimbabwe’s economy has experienced a sharp deterioration in the last five years,” the IMF said in its report released on Wednesday night. “Real gross domestic product has declined by about 30% and is still contracting.
Inflation doubled in each of the last three years to reach 600% at the end of 2003. This has had dire social consequences.”
Inflation currently stands at 602,5%.
The IMF said this had resulted in high and rising unemployment, doubling poverty since 1995, school enrollment declining to 65% in 2003 and the HIV/Aids pandemic which remains largely unchecked.
“While this in part reflected exogenous shocks, such as inclement weather, structural changes in agriculture related to the way in which the land reform was implemented negatively affected agricultural production,” the IMF said.
“In recognition of Zimbabwe’s grave food shortages, foreign donors have provided large amounts of humanitarian aid, but other donor assistance has been curtailed because of concerns over governance issues.”
National Economic and Consultative Forum spokesman Nhlanhla Masuku said while he had not seen the report he found the IMF a “waste of time”.
“All this talk about debt is just talk, talk, talk,” he told businessdigest. “The IMF and World Bank are out there to stifle development. Actually it is a death-trap for Zimbabwe if we continue to take them so seriously. They got us into this mess in the first place.”
Masuku said Zimbabwe had opened up its economy too fast and thus was now unable to plug the gap between reality and debt repayment.
Zimbabwe’s arrears to the IMF as at the end of February stand at US$290 million.
Government has pledged to make quarterly payments of US$1,5 million. A payment of US$6 million was recently paid to the IMF.