IN February 2020, the International Monetary Fund (IMF) painted a gloomy picture about Zimbabwe’s economic recovery prospects.
After concluding the Article IV Consultation, it gave a damning conclusion of roadblocks that lay ahead with graphic details on how to navigate the choppy waters.
“The government that came to office following the 2018 elections adopted an agenda focused on macro stabilisation and reforms. This was supported by a Staff Monitored Programme (SMP) (which) is now off-track as policy implementation has been mixed…delays and missteps in foreign exchange and monetary reforms have failed to restore confidence…reengagement with the international community continues to face delays. Zimbabwe has not yet defined the modalities and financing to clear arrears to the World Bank (WB) and other multilateral institutions,” it said.
Covid-19 was still sniffing on Zimbabwe’s doors at the time.
But we knew the pandemic would wreak havoc and leave a trail of disaster that requires huge fiscal support. Today, the country has been badly bruised and the Ministry of Finance and Economic Development is scouring the globe to borrow US$10 million, which adds to the US$8 billion debt set on its books at the end of 2020.
The Finance minister, Mthuli Ncube knows that he is plunging the nation into debt distress.
Without cash in his purse, Ncube has run out of options.
But his revelations last week that the IMF is heading back to Harare after demonstrating its frustrations a year ago were refreshing because while the Bretton Woods Institution had its fair share of blunders, its diligence was displayed after intervening to solve domestic problems.
Harare has failed to roll out a convincing debt clearance roadmap, it has run out of ideas about how to fix its two decades long economic crisis.
The government is broke.
It owes the IMF nothing but continued engagements will be important for several reasons. The IMF holds the key to future access lines of credit — multilateral lenders listen to the IMF just as it listens to its peers — the World Bank, the Paris Club and the African Development Bank. But Zimbabwe, which is scaling up its re-engagement efforts must demonstrate, through the SMP that it is ready to work with the international community.
The SMP will become a low hanging fruit before crucial debt clearance talks can restart after the negotiations flopped in Lima, Peru five years ago.
Some of the key roles of the IMF are to open access to technical assistance in banking, fiscal affairs, and exchange matters — all of which are in complete disarray. Dealing with the IMF increases opportunities for trade and investment, after the economy contracted sharply in 2020.
This is why Zimbabwe must heed advice from the IMF.
Harare stands to benefit from the assistance that has been deployed and worked elsewhere.
We caution though, that Zimbabwe must not take everything hook line and sinker.
There should be frank and constructive dialogue.