Friday, October 25, 2013

(NEWZIMBABWE, REUTERS) Chinamasa pledges to stick with IMF programme
03/10/2013 00:00:00
by Reuters

FINANCE minister Patrick Chinamasa has said the country will stick to an IMF monitoring programme that could pave way for the country to clear its debts, as the economy grapples with chronic power cuts and a crippled manufacturing sector.

A manufacturing sector, crippled first by World Bank structural adjustment (ESAP) from 1991-1996, a disastrous policy, which they then tried to sell as 'Mismanagement By Mugabe'. Then, there are the economic sanctions of ZDERA, especially Section 4 C. Let's have honesty in reporting from Reuters.

S. 494 (107th): Zimbabwe Democracy and Economic Recovery Act of 2001

(c) MULTILATERAL FINANCING RESTRICTION- Until the President makes the certification described in subsection (d), and except as may be required to meet basic human needs or for good governance, the Secretary of the Treasury shall instruct the United States executive director to each international financial institution to oppose and vote against--

(1) any extension by the respective institution of any loan, credit, or guarantee to the Government of Zimbabwe; or

(2) any cancellation or reduction of indebtedness owed by the Government of Zimbabwe to the United States or any international financial institution.


In this Act:

(1) INTERNATIONAL FINANCIAL INSTITUTIONS- The term `international financial institutions' means
the multilateral development banks and
the International Monetary Fund.

(2) MULTILATERAL DEVELOPMENT BANKS- The term `multilateral development banks' means the
International Bank for Reconstruction and Development, the International Development Association, the
International Finance Corporation, the
Inter-American Development Bank, the
Asian Development Bank, the
Inter-American Investment Corporation, the
African Development Bank, the
African Development Fund, the
European Bank for Reconstruction and Development, and the
Multilateral Investment Guaranty Agency.

- MrK

Zimbabwe is still emerging from a decade of economic decline and hyperinflation, but the economy is stuttering in the aftermath of a disputed election in July that has extended President Robert Mugabe's 33-year rule.

Harare began an International Monetary Fund-led staff-monitored programme in June which, if successful, could help it clear $10 billion in external debts and give it access to new credit from international lenders.

Under the programme, which is set to run until December, it is expected to implement a raft of economic reforms.

"We are committed to the programme," Finance Minister Patrick Chinamasa told Reuters on Thursday.

He said he will travel to Washington this weekend to assure IMF officials there that Harare will continue with programme.

Consumers in the southern African nation have experienced electricity blackouts lasting up to 16 hours a day in recent weeks, which state-owned power utility ZESA attributes to maintenance work on its ageing power generating plants.

Energy and Power Development Minister Dzikamai Mavhaire said this week the only long-term solution to the power crisis was to invest in new plants, which will require billions of dollars and take time to build.

Zimbabwe has a peak demand of 2,200 megawatts of electricity, but only has a supply of 1,167 MW, including imports from Mozambique.

The electricity crunch has hit the manufacturing and agriculture sectors, where output has fallen although mines have largely been spared. Zimbabwe has the second-largest platinum reserves in the world after South Africa, as well as one of the biggest diamond deposits and large quantities of coal and gold.

"We are in the intensive care unit," local media quoted Charles Msipa, head of the Confederation of Zimbabwe Industries as saying at the Wednesday launch of a report on the state of manufacturing, which showed many firms were operating at a third of capacity.

"Capacity utilisation is declining, in some accounts by alarming margins, leading to downstream effects like retrenchments and reduced activity on the domestic economy," he said.

Manufacturers are battling with high financing costs, with banks charging as much as 20 percent interest, and with demands for higher wages from restless workers.

The power cuts have hampered irrigation of the winter wheat crop in a country that a United Nations agency says is facing its worst food shortages in four years.

Mugabe's new government is crafting a new economic policy, but the 89-year old has vowed that all policies will revolve around his plans to force foreign-owned firms to give majority stakes to black citizens.

The policy, known as indigenisation, is seen as discouraging badly needed foreign investment and hindering access to IMF and World Bank funding.

Nevertheless, Zimbabwe's stock exchange continues to recover after the industrial index plunged 11 percent on Aug 5, the first day of trading after Mugabe's re-election.
The main index rose 14 percent in September alone in what traders said was a market correction from an overdone sell-off.

Foreign investors are mostly targeting Zimbabwe's largest mobile firm Econet Wireless and SAB Miller's local unit Delta, the two largest firms on the exchange.

"There was initial panic but investors have realised that while the government may not induce the desired economic recovery, there is no additional political risk," a local stock broker said.

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