Antoinette Monsio Sayeh, the Director of the International Monetary Fund (IMF)’s African Department told a meeting in Harare on the IMF’s 2014 Regional Economic Outlook for Sub- Saharan Africa, that Zimbabwe should fast track its economic reform agenda and gather support for a strategy for clearing outstanding arrears.
“Zimbabwe should address four key issues to helping fast track the country’s policy reform agenda,” said Sayeh.
“Balancing the country’s fiscal budget, the restoration of confidence and stability in Zimbabwe’s financial sector, addressing the country’s debt challenges and enhancing the business environment with a view to attracting investments are some of the priority areas that should be urgently addressed for the country’s economic growth.”
Finance minister Patrick Chinamasa revealed that the country’s total debt stood at $9,9 billion, and the current debt overhang had become a serious impediment to the country’s socio-economic development and transformation agenda.
According to figures released by the finance ministry, the country’s public external debt constituted 56% of the total external debt, while publicly guaranteed debt was 15%, the Reserve Bank of Zimbabwe (RBZ) external debt was 7% at $596 million, with private sector non-guaranteed debt at 22%.
“Zimbabwe owes the Paris club $2,36 billion with the highest figure being for Germany at $851 million, while multilateral debt is valued at $2,12 billion with the highest figures owed to the World Bank at $1 billion. The African Development Bank is owed $621 million and European Investment Bank $280 million,” reported the finance ministry.
Sayeh said for most of sub- Saharan Africa, growth trends remained favorable with expectation that the region’s economy would expand by 5, 75 percent in 2015.
“The forecast is that the sub- Saharan Africa is set to remain the fastest growing region in the world just behind emerging and developing Asia,” said Sayeh.
“However, lower growth in emerging markets and the anticipated monetary tightening in advanced economics could have a negative impact on the region.”
The IMF called on the governments in the sub-Saharan region to address the infrastructure deficit as a way of boosting investment on the continent.
“Financing for infrastructure projects in the region comes from domestic resources and it is not always the lack of financing that is limiting infrastructure investment,” said Sayeh.
“In many countries, regulatory and implementation capacity constraints in projects developments and execution are the main challenges.”
Sayeh cited the absence of electricity in the region as one example of infrastructural challenges that made it difficult for increased investment in sub- Saharan Africa.
“The absence of electricity is making it difficult for the development of the manufacturing sector and for it to be fully unlocked,” said Sayeh.
She pledged the IMF’s commitment to working in partnership with the Zimbabwean government in addressing the country’s reform agenda .
“These issues are key on the authorities reform agenda and they are going to be monitored with the help of IMF staff under the proposed new 15 month Staff Monitored Programme (SMP),” said Sayeh.
Samuel Undenge, Finance and Economic Development Deputy minister said in pursuit of the debt resolution strategy, government had adopted the successor to the SMP in a move aimed at promoting inclusive growth for the country.
“The objectives of the programme include the consolidation of the country’s fiscal policy, improving Zimbabwe’s external position, mobilising international support for resolving the country’s debt situation and addressing some of the key structural reforms areas to enhance the business climate and boost the country’s productivity and competitiveness,” said Undenge.
Sayeh however said, regionally, Ebola had the potential to thwart sub- Saharan Africa’s projected growth.
“Investors are panicking over Ebola and there is urgent need to ensure that the disease does not lapse into 2015,” she said.
According to the latest Regional Economic Outlook- Sub Sharan Africa: Staying the Course study, growth trends in most of sub- Saharan Africa remained strong with expectations that the region’s economy will continue growing at a fast clip.
However, this broad picture is underpinned by three distinct factors namely the Ebola outbreak, homegrown fiscal vulnerabilities and a less supportive external environment.
“A market slowdown in emerging markets could weaken demand for commodity exports from the region,” read the report.
“The ensuing decline in activity prospects may lead to reduced appetite for investment, with more long term implications on the growth momentum.”
Post published in: Economy