IMF tells Zimbabwe to clear its debt first to unlock funding

The International Monetary Fund (IMF) today said the Zimbabwe government must clear its debt with multi-lateral institutions to access new funding.

Zimbabwe in June 2013 undertook an IMF staff monitored programme (SMP), an informal and flexible instrument for dialogue between the Fund staff and a member country on its economic policies.

However, implementation of the SMP has been mixed, with government struggling to rein in its wage bill which currently gobbles up as much as two-thirds of its total revenue– a key aspect of the programme.

Zimbabwe owes IMF and World Bank $124 million and $1 billion, respectively.

Addressing the parliamentary committee on Financial and Economic Development committee today, IMF representative in Zimbabwe, Domenico Fanizza said the country could consider financial help from the Fund after reaching an agreement in repaying the arrears.

“We could consider financial support when there is an agreement on how to repay the arrears. We cannot extend a loan to a country in arrears,” said Fanizza.

“Some proper policies have to be made on paying back World Bank debts. Zimbabwe has the capacity to implement the key economic reforms which would allow the country to qualify for financial support in future.”

He added that Zimbabwe had an opportunity to collaborate with the World Bank to initiate economic programmes which will address the weak economy.

However, Fanizza commended government for reducing fiscal spending under a difficult economic situation.

“Preliminary assessment shows that the programme is on course, the government has maintained the right policy direction. All benchmarks which were set by June which include fiscal balance, social spending, and reduction of accumulation of domestic arrears has been met,” he said.

Fanizza recommended government to resuscitate the country’s infrastructure to help improve business.

“Key issues that need to be tackled are the business environment, the cost of doing business and general environment that needs a comprehensive approach of creating a climate which is conducive to entrepreneurship. That implies basic things, like improving infrastructure of the country.”- The Source

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