An SMP is an informal agreement between country authorities and IMF staff to monitor the implementation of the authorities’ economic program. It will cover the period April-December 2013.
The SMP came into existence after two years of its recommendation by some directors of the Fund. In 2011, after making Article IV consultations on Zimbabwe, IMF directors were divided about whether or not to grant the SMP to Zimbabwe, as some recommended it while others were against the idea. Hoewever, two years down the line, the SMP has been finally launched.
“The SMP supports the Zimbabwean authorities’ comprehensive adjustment and reform program and has been endorsed by Zimbabwe’s Cabinet, a strong signal of their commitment. A successful implementation of the SMP would be an important stepping stone toward helping Zimbabwe re-engage with the international community,” said the Fund.
The SMP is said to focus on putting public finances on a sustainable course, while protecting infrastructure investment and priority social spending, strengthening public financial management, increasing diamond revenue transparency, reducing financial sector vulnerabilities, and restructuring the central bank.
“In particular, fiscal consolidation efforts aim to move the primary budget balance from a deficit in 2012 to a small surplus in 2013, helping start what should be a gradual rebuilding of fiscal buffers and international reserves,” said the Fund.
The IMF however noted that the decline in commodity export prices, financial sector stress, and uncertainties related to the election year, pose some of the risks to the program.
“Going forward, sustaining high growth will require determined efforts at economic reform. In this regard, the SMP already envisages important reforms in public financial management, financial sector regulation, and other areas,” added the Fund
Zimbabwe’s external debt is high and largely in arrears, cutting off the country from access to most external financing sources. “In particular, Zimbabwe remains unable to access IMF resources because of its continued arrears to the Fund. ÃÂ strong track record of maintaining macroeconomic stability and implementing reforms, together with a comprehensive arrears clearance strategy supported by development partners, will be essential for resolving Zimbabwe’s large debt overhang.
IMF staff will remain engaged with the authorities to monitor progress in the implementation of their economic program, and will continue providing targeted technical assistance in order to support Zimbabwe’s capacity-building efforts and its adjustment and reform program,” said the Fund
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