Last week an IMF team headed by Fanizza met with Chinamasa, chief secretary to the President and Cabinet Misheck Sibanda, Governor of the Reserve Bank of Zimbabwe John Mangudya, members of the Parliamentary Committee on Finance and Economic Development, other senior government officials, and representatives of the private sector, civil society and development partners.
Following its visit to Zimbabwe, the IMF said the country’s policy reform agenda for the remainder of the SMP consists of:
*Mitigating the impact of this year’s adverse shocks on the external position and growth. The authorities plan to further reduce the primary deficit and to achieve balance by 2016. This will help increase international reserves, despite the worse-than-expected global and domestic environment. The top priority remains to reduce public sector employment costs to make room for (a) much-needed capital spending to raise growth; and (b) social spending to protect the poor;
*Restoring confidence in Zimbabwe’s financial sector. Completing the recapitalisation of the RBZ will enhance its ability to supervise the banking sector. There are no longer any distressed banks, all banks now fully comply with capital requirements, non-performing loans have declined, and the inter-bank market is now functioning. As a result, banks are now in a better position to extend credit to the private sector, which should help economic activity. However, to cement financial stability and confidence, non-performing loans need to decline further;
*Improving the investment climate. The authorities’ intention to publish on the website of the Zimbabwe Investment Authority clear guidelines on the implementation of the Indigenisation and Economic Empowerment Laws should help reduce uncertainty for both domestic and foreign investors; and
*Garnering support for a strategy to clear arrears with multilateral institutions. The authorities’ efforts to discuss their strategy on resolving the external arrears with multilateral creditors at the dedicated stakeholders meeting in October will be instrumental in highlighting the authorities’ reform agenda on the path toward normalising relations with the international community.