Maravi

Zim economic recovery has improved – IMF

Zim economic recovery has improved – IMF
By Kingsley Kaswende in Harare
Fri 26 Mar. 2010, 20:30 CAT

THE International Monetary Fund (IMF) has said Zimbabwe’s economic recovery has improved although it still remains threatened by the absence of significant policy implementation.

An IMF mission led by Vitaliy Karamarenko that visited Zimbabwe between March 3 and 17 to conduct the 2010 Article IV consultation discussions stated on Wednesday that following a decade of severe economic decline, there was improvement in the economy.

“In 2009, following a decade of economic decline and hyperinflation during 2007–08, policies improved significantly. The multi-currency system adopted in early 2009 helped restore price stability, restart financial intermediation, and impose fiscal discipline by precluding the option of budget deficit monetisation,” Karamenko stated.

“Budget revenue increased significantly, which helped finance improved delivery of public services, while the fiscal position was broadly balanced. Price and exchange system liberalisation improved allocation of resources and availability of goods in the domestic markets. In response to better policies, short-term capital inflows and FDI increased in 2009. All these positive steps have supported a nascent economic recovery.”

But Karamenko stated that the country’s resurgence would be threatened in the absence of sound policy implementation.

“However, the economic recovery remains fragile and domestic and external imbalances are building up; therefore, significant policy challenges need to be addressed without delay,” he stated.

The IMF stated that the Zimbabwean government needed to ensure that sufficient budgetary allocations were made to critically important infrastructure rehabilitation projects and social programs supporting vulnerable groups while maintaining a fiscal stance consistent with macroeconomic stability.

“To this end, budgetary expenditures need to be better prioritised and the central government wage bill needs to be reduced as a share of revenues, including through the elimination of ghost workers based on the results of the on-going payroll audit. The multi-currency system, which the authorities have decided to maintain until 2012, will provide a strong nominal anchor,” Karamenko stated.

Karamenko called for an increase in donor assistance to Zimbabwe, as the country struggles to win international support to secure the US$10 billion needed to restore the economy to its original levels.

“Zimbabwe remains heavily dependent on humanitarian assistance to meet basic needs of its population. Continuing efforts to strengthen relations with the international community and attracting increased donor assistance, in particular in the areas of health, education, and critical infrastructure, would help improve the living conditions of ordinary Zimbabweans,” Karamenko stated.

He stated that the IMF would continue to maintain a close policy dialogue and provide targeted technical assistance in the context of regular visits.
Recently, the IMF restored Zimbabwe’s voting rights.

During the recent visit, the IMF mission met with Prime Minister Morgan Tsvangirai, finance minister Tendai Biti, economic development minister Elton Mangoma, Reserve Bank of Zimbabwe governor Dr Gideon Gono, and other senior government officials, as well as representatives of the diplomatic and business communities, and civil society organisations and labour unions.

Labels: IMF, ZIMBABWE

posted by MrK @ 2:40 PM