The earlier statement declared: "Technical and financial assistance
from the IMF will depend on establishing a track record of sound policy
implementation, donor support and a resolution of overdue financial
obligations to official creditors, including the IMF." That seemed to
dash cold water on hopes in Zimbabwe for rapid progress toward new
credits for a turnaround.
The latest statement indicated Zimbabwe has taken steps on the path
toward reintegration in the international financial system and,
potentially, new loans for reconstruction.
An early test of Zimbabwe’s credibility will come on Monday when
leaders of the Southern African Development Community will consider a
US$2 billion loan package for Harare.
Such bilateral loans are important because they will allow Harare to
settle arrears to the IMF and other multilateral lenders on its
external debt of some US$5.25 billion.
The IMF mission led by Vitaliy Karamenko was in the country from March
9 to 24 for so-called Article IV consultations to assess economic
conditions and the country’s policy response. The mission chief issued
a statement Thursday reporting among other details an estimated 14%
decline in gross domestic product in 2008 on top of a 40% drop from
2000 to 2007.
"Poverty and unemployment have risen sharply," the statement said,
understating the case if anything as more than half of Zimbabweans need
food aid to survive and 90% are jobless.
With the country in an "acute" economic and humanitarian crisis, it
said, the recently formed unity government prepared a near-term
recovery program focused on "macroeconomic policy and supply-side
measures aimed at achieving low inflation, arresting economic decline,
and improving social conditions." The mission praised the new
government’s "commitment to eliminate" central bank funding of
operations and to limiting spending to revenues.
"The credibility of the government’s commitment to fiscal discipline is
reinforced by the adoption of the multiple currency system," said the
mission report, referring to the decision to allow U.S. dollars, South
African rand and other currencies to circulate alongside the
essentially worthless Zimbabwe dollar for use by consumers and
businesses.
Dollarization has not only quelled hyperinflation which ran at a
staggering rate measured in the quadrillions or more percent, but
prices have actually declined in recent months.
But, "To facilitate transactions and improve credit availability, there
is an urgent need to attune the payments system and banking supervision
to the needs of the multiple currency system," the mission’s statement
said. "Accountability and transparency of the Reserve Bank of Zimbabwe
should be strengthened," it added in a circumspect comment regarding
the institution some have described as the world’s worst central bank.
"Regarding structural reforms," the statement continued, "a number of
positive steps that are in line with previous IMF recommendations have
already been implemented, including price liberalization, the removal
of [foreign exchange] surrender requirements and most exchange
restrictions on current account transactions, the imposition of hard
budget constraints on parastatal enterprises, and the elimination of
the Grain Marketing Board monopoly."
It added: "Going forward, strengthening the investment climate,
ensuring protection of property rights, and maintaining wages at
competitive levels will be essential for increasing domestic and
foreign investment."
VOA News
Post published in: News