IMF view on political developments in Zim and economic impact

By: 
IMF
Source: 
http://www.imf.org

Below are the remarks by IMF spokesman William Murray on the political developments in Zimbabwe.

QUESTION: “What is the IMF's assessment about the current political developments in Zimbabwe as it relates to economic prospects?”

ANSWER: We've had a mission on the ground in Zimbabwe this week. I think they just wrapped up. It is part of our regular interim, Article IV review cycle to update our assessment of Zimbabwe's fiscal position. Foreign exchange developments and to inquire about the new administration's economic plant. It is a fairly detailed mission. I don't have anything specific from that mission to share with you at the moment but what I can tell you is what our general views are on Zimbabwe. Let me just recap that briefly.

The Zimbabwe economy faces severe challenges. Unsustainable fiscal deficit has led to severe liquidity shortages, created inflationary pressures and threatened the viability of the financial sector and the exchange rate regime. Restoring growth will require concerted efforts to tackle the fiscal deficit, including through rationalizing and better targeting of the expensive agricultural support programs. These efforts should be complimented by structural reforms to strengthen the role of the private sector by improving the business climate and reducing policy uncertainty in Zimbabwe.

Our understanding as a result of this mission but also in our ongoing context is that the authorities are cognizant of the challenges facing Zimbabwe and have expressed their determination to address them. They presented their 2018 budget on December 7th and that budget stresses that the government's intention to re-impose budget discipline, reform and open the economy and engage with the broader international community. In this regard, the clarification and simplification of what's called the Indigenization Policy is a step in the right direction.

Lastly, and you've heard this before from us. The IMF stands ready to support the authorities in their efforts to address their challenges. In addition to a strong and coherent reform program, a concerted international effort will be required to revive and reintegrate the Zimbabwe economy. An IMF financial arrangement, for example, would only be possible, and we were asked about this recently. It would only be possible after progress is made in resolving Zimbabwe's arrears to other international financial institutions and other creditors. Thanks for that question.

 

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