AN International Monetary Fund (IMF) team is expected in Zimbabwe within the next three months to revive the Staff Monitored Programme (SMP), Finance and Economic Development minister Mthuli Ncube has said.
The Treasury boss said the IMF’s visit was part of a broader international re-engagement drive announced by President Emmerson Mnangagwa in 2017, as he made first steps towards reintegration into the global community following decades of isolation under the late President Robert Mugabe.
Harare’s programme is expected to rebuild broken ties and cultivate new friendships including in Europe and the United States of America — two regions that have renewed sanctions over alleged human rights violations.
Sour relations have existed due to failures by Harare to settle debts with international financial institutions (IFIs) from 1999.
With debts mounting, Zimbabwe was shut out of the global financial system, triggering an economic crisis that ended with the collapse of the domestic currency in 2008 and gross domestic product falling by 50% in a decade.
In an interview this week, Ncube said forging ties with IFIs, especially the IMF, topped his agenda.
“To kick start the engagement process, an IMF Staff Visit Mission is expected in the second quarter, followed by an Article IV Mission in the third quarter,” the minister said.
“All things being equal an SMP should be concluded in early 2022. The government has already made significant progress in stabilising the economy through the various economic reforms implemented under the Transitional Stabilisation Programme (TSP). The implementation of these critical reforms will be further strengthened during the NDS1 (National Development Strategy 1) period.”
The NDS1 blueprint replaced TSP this January, and will be running until 2025.
An SMP is an informal agreement between country authorities and the IMF’s staff to monitor implementation of economic programmes.
However, SMPs do not entail financial assistance or endorsement by the IMF’s executive board.
Ncube said the re-engagement programme was part of key targets under NDS 1, where the government has undertaken to clear debts of up to US$8 billion to various lenders including the Paris Club, the African Development Bank and the World Bank.
About 70% of these debts were in arrears at the end of 2020.
Previous IMF reports had raised concern over deep macroeconomic imbalances that have held back recovery.
The Fund had proffered a series of strategies to ride over Zimbabwe’s problems.
Last year, the IMF said the SMP had made no progress, and at that time it appeared the Fund was parting ways with Zimbabwe.
IFIs want Mnangagwa’s administration to address several forms of structural distortions and do away with subsidies to facilitate economic recovery.
The IMF emphasised the need to restore macroeconomic and financial sector stability and eliminate central bank financing of the fiscal deficit.
It said the country must adopt a market based foreign exchange, and privatise loss making parastatals.
Several SMPs had also underscored the need to reduce a ballooning wage bill, which once gobbled in excess of 96% of the budget.
Ncube said: “Government, through implementation of the Transitional Stabilisation Programme (TSP), has delivered budget surpluses in 2019 and 2020, managed to stabilise the local currency and expeditiously rolled out the devolution policy, among other structural issues.
“In order to close the gap between average incomes and the cost of goods and services, a number of initiatives have been taken aboard.