ZIMBABWE’S performance under the Staff Monitored Program (SMP) has been “broadly satisfactory” despite effects of the difficult electoral transition period, according to the International Monetary Fund (IMF).
In a July report on the first and second reviews under the Zimbabwe’s SMP, IMF said performance under the programme has been uneven, but the programme has provided a useful anchor in an election year and succeeded in keeping macroeconomic conditions relatively stable and in starting key structural reforms.
“The electoral process and the post -election transition delayed the implementation of structural reforms,” reads part of the report.
The IMF said Zimbabwe met two out of six quantitative targets for the first SMP review although most deviations were moderate.
“The authorities met the floors on protected social spending and on payments to the Poverty Reduction and Growth Trust (PRGT). The continuous ceiling on the stock of non-concessional external debt was met the at end of June, but subsequently exceeded by a relatively small amount, following the signing of a US$ 319 million non concessional loan with China Eximbank in November 2013 to finance an essential regional infrastructure project — the overhaul of the Kariba hydro power plant,” said IMF.
Zimbabwe missed the floor on the primary fiscal balance by 1, 3%, mainly due to outlay overruns, some of which reflected the government’s efforts to clear old domestic arrears.
The continuous zero ceiling on new domestic arrears was also missed, in part because the authorities gave the priority to clear old verified arrears over payment of unverified new bills.
“In fact, although the authorities accumulated some new domestic arrears in 2013, on balance, the overall stock of arrears declined by US$ 54 million (about 0, 4 % of GDP) in 2013, which compares favorably with the reduction of US$ 23 million targeted under the programme, ” it said.
IMF said reflecting the fiscal constraints, the floor on usable international reserves was missed by a small margin, as reserves stayed unchanged rather than show the small increase targeted for end of June 2013.
Zimbabwe is said to have met three of the five structural benchmarks for the first review were met, although two were met with delay.
The new Income Tax Bill was submitted to Parliament in May 2013 and passed in June 2013.
The new framework for contingency planning and systemic risk management was submitted to the RBZ board and approved in October 2013; and the time bound action plan by the Public Service Commission on measures to modernise human resource management and payroll systems was submitted to the Ministry of Finance and Economic Development in mid December 2013.
“The report on the stock of verified pre-2013 domestic arrears was finalized in mid December 2013.The authorities made public the total stock of domestic arrears and the strategy to clear it in the context of the 2014 National Budget Statement submitted to Parliament in December 2013,”IMF said.
“The authorities did not issue a statutory instrument establishing a formula for diamond dividends as envisaged under the program, but took broadly equivalent measures to increase diamond revenues and boost transparency in the industry.”
For the second SMP review, the authorities met three of the six revised quantitative targets, the IMF indicated.
One of the five structural benchmarks for the second review was met.
“The RBZ Debt Assumption Bill (formerly the RBZ Debt Relief Bill) was approved by Cabinet in November 2013 and submitted to Parliament in April 2014,” it said.