THE International Monetary Fund (IMF) will hold its crucial meeting on Zimbabwe in Washington DC on Monday next week, businessdigest has learnt.The Bretton Woods institution will discuss the economic performance of the country and the meeting is considered pivotal in deciding the fate of the Staff-Monitored Programme (SMP) following the government’s failure to meet the set targets of the initial agreement.
“The IMF will hold a board meeting on Article IV consultation with Zimbabwe on Monday next week,” a source revealed.“The meeting will discuss the problems Zimbabwe is facing right now and the way forward as well as the SMP. The meeting will be based on the mission’s visit in December last year and there will be a report on the outcome of the meeting that will be published soon after the meeting.”
The IMF has already raised a red flag over the country’s failure to meet targets on inflation and government’s controversial spending, especially on deals with Sakunda Holdings, a company linked to President Emmerson Mnangagwa’s backer, Kudakwashe Tagwirei.
Government has admitted that it failed to meet the targets set in the initial SMP, but feels that the process can still continue.In a prior meeting since the agreement to carry out the SMP was signed, the IMF painted a grim picture of the current economic situation in the country and was critical of government’s disastrous fiscal consolidation measures, which have resulted in a volatile exchange rate and hyperinflation.
The IMF said urgent measures needed to be taken to address the situation.“Policy actions are urgently needed to tackle the root causes of economic instability and enable private-sector led growth. The key challenge is to contain fiscal spending consistent with non-inflationary financing and tighten monetary policy to stabilise the exchange rate and start rebuilding confidence in the national currency,” the IMF said in a statement after its visit in September last year.
In his 2020 budget, Finance minister Mthuli Ncube said he had missed fiscal reform targets under the Transitional Stabilisation Programme (TSP) and the SMP.
The meeting on Monday comes after the World Bank last week painted a gloomy picture of the country’s economy.
In her presentation at the Confederation of Zimbabwe Industries Manufacturing Survey Launch last week,titled The World Bank Outlook on Zimbabwe in the context and of the Regional and Continental Outlook, World Bank senior economist Stella IIieva noted that Zimbabwe has experienced economic decline over the years and with the prevailing currency distortions, its future was uncertain and this could lead to further economic collapse and massive poverty.
“Before 2019, the economy was growing faster than the regional peers, but GDP [gross domestic product] has fallen by 7,5%, this entails that uncertainty about Zimbabwe’s economic outlook is very high,” IIieva said.
“The economic outlook for Zimbabwe is likely to further deteriorate, requiring more social spending.”She said addressing distortions in the market is pivotal to the economy’s revival.
“Addressing price instability and distortions in the forex exchange market will be key to growth prospects, boosting firm productivity, enhancing trade openness and integration, mitigating the impact of the extreme weather, economic adjustments on the poor and it’s important that the poor have access to food and education,” she said.