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Govt must stop extravagance: IMF

GOVERNMENT is coming under growing pressure to cut back on luxury and superfluous spending — such as continually buying expensive vehicles for cabinet ministers and funding President Robert Mugabe’s endless overseas trips — and live within its means following an International Monetary Fund (IMF) mission to Harare which this week demanded balancing the primary fiscal budget.

Kudzai Kuwaza

The IMF mission, led by Domenico Fanizza, told government to stop extravagance or spending money it does not have. Of the US$3 billion import bill in the first half of the year, most of it was on duty-free government imports, highlighting costly consumption.

“This will send a strong signal that Zimbabwe’s government intends to live within its means. Moreover, fiscal policy will focus on raising the efficiency and quality of public spending and rebalancing the expenditure mix towards infrastructure and social outlays,” the IMF said.

“Scarce public resources need to be used appropriately, underscoring the importance of containing pressures on the wage bill, stepping up reforms in the taxation of the mining sector, amending the Public Finance Management and Procurement Acts and approving the Public Debt Management Bill.”

Government is being pressured to reduce its 236 000-strong workforce, which chews US$248 million a month or 76% of revenues, and contain an unsustainable wage bill crowding out capital and social expenditures.

The IMF delegation visited Harare from September 17 to October 1 to conduct the third and last review under the Staff Monitored Programme (SMP) approved by the Bretton Woods institution in June 2013 and to hold discussions on a new 15-month successor SMP.

It met with Finance minister Patrick Chinamasa, Chief Secretary to the Office of the President and Cabinet, Misheck Sibanda, Reserve Bank governor John Mangudya and senior government officials, as well as representatives of the private sector, civil society and development partners.

As part of the proposed new 15-month SMP to end December 2015 after it met all the end-June 2014 quantitative targets and structural benchmarks under the programme, the IMF said Zimbabwe must pay its debts and arrears. The country’s total debt stock, stifling new funding and investment to revive the faltering economy, stands at US$9,9 billion.

Economist Godfrey Kanyenze said: “Government should stop digging a hole for itself; the more we delay coming up with a debt strategy, the more difficult it will become to get out.”

Since last year’s general elections, the economy has been nose-diving. The IMF said restoring investor confidence and stability in Zimbabwe’s financial sector was critical to recovery. It also said resolving the problem of the US$700 million non-performing loans and clarifying indigenisation laws were also critical.
Economic analyst John Robertson said revival of the productive sectors is crucial to recovery.

“The productive sectors have been disabled, so they need to be enabled to help the government to revive the economy, create employment, increase its revenues and settle debts.”

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