eBusiness Weekly
l Economic reforms to come up for discussion
l Change in Govt stalled last year’s recommendations
Business Writer
An International Monetary Fund (IMF) delegation is expected in the country this Wednesday for the annual Article IV consultations – with discussions likely to focus on monetary and fiscal policy, state institutions and other risks factors.
Every year, the IMF arranges bilateral Article IV consultations with Zimbabwe and other member countries, with teams being dispatched to collect economic and financial data and discuss economic policy measures with officials.
Through these consultations, the IMF attempts to assess each country’s economic health and anticipates its future financial problems and also make some recommendations.
The staff report prepared by the IMF staff for the Executive Board’s consideration on July 5, 2017, following discussions with Zimbabwean officials on economic developments and policies that ended on May 13 the same year, highlighted issues to do with slow economic reform momentum, high expenditure levels, subdued revenues, limited access to foreign inflows and rising domestic borrowing, resulting in unsustainable fiscal imbalances.
The staff report noted Government’s expansionary fiscal stance curtailed net capital flows resulting in cash shortages.
“Budgetary operations are crowding out the private sector, and the expenditure profile tilted towards employment costs and unsustainable agricultural support is inhibiting investments in other priority sectors, particularly infrastructure and social outlays.
On the financial side, credit to the private sector remains subdued, and some domestic banks face increasing risks emanating from fiscal imbalances,” said the IMF in its Article IV Consultations press release.
Little change registered
As such, economic commentators said nothing fundamental has changed since the IMF’s last visit.
Improvements in the functioning of state – owned enterprises and upgrades in public financial management, governance and accountability remain limited. “Discussions are likely to focus on the same issues as the last ones because Zimbabwe has not implemented any reforms to stop the economy from bleeding,” said Walter Mandeya, an analyst with Trigrams Investment.
“But the good thing is that the IMF is coming at a time the country has put in place a new policy framework, the Transitional Stabilisation Programme, so the consultations will offer a good opportunity to discuss the new economic policy and if there are any red flags, Government will soon know and make the necessary adjustments,” Mandeya said.
“We hope that the forthcoming meetings will be a good reason to refresh the agenda of our dialogue with the IMF, to take into account aspects of the new action programme of the Zimbabwean Government,” Mandeya concluded.
The IMF team is expected to meet government officials in the ministry of finance, central bank officials and industry representatives among others.
I M F to assess the reforms
Sources within the IMF confirmed this week that the Harare-bound team will also be seeking to assess the reforms being instituted for economic development and growth.
“The budget 2018 and 2019 are likely to come up for discussion and also issues to do with the exchange rate, the stability of the financial services sector, inflation and growth prospects,” said the source.
“The consultations are also about giving the advice, but the country is not obliged to implement anything.
“It’s just advise, but if implemented it’s for the good of the country, if it doesn’t its presumably not good for the country, just like the doctor patient relation,” said the source.
The source,however, said the
consultations are independent
from the country’s efforts to get funding from the international financial institutions.
Full implementation of the recommendations means there are fewer problems to tackle and this gives Government a stronger bargaining position.
