IMF calls on Zim to restore fiscal sustainability - CNBC Africa

IMF calls on Zim to restore fiscal sustainability


by Trust Matsilele 0

IMF calls on Zimbabwe to restore fiscal sustainability. PHOTO: IMF

Zimbabwe faces serious medium-term challenges and achieving sustainable, inclusive growth will require strong macroeconomic and financial policies, an enabling business environment, and normalised relations with creditors.

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“Financial sector vulnerabilities persist, stemming from the high levels of nonperforming loans, low capitalisation and low liquidity, with wide differentiation across banks,” noted the IMF.

According to the International Monetary Fund (IMF), Zimbabwe’s fragile economic situation is characterised by a growth slowdown, a large external deficit, and low international reserves.

Zimbabwe has been urged to implement determined and comprehensive reforms so as to ensure sustainable and inclusive growth.

The IMF said the southern African country’s recent measures meant to boost transparency in the diamond sector and to modernise mining legislation.

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“To achieve sustainable development and social equity, the government has launched a new five-year development plan, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZIM ASSET),”said IMF.

According to the Bretton Woods Institution, Zimbabwe’s external position remains precarious requiring authorities’ commitment in rebuilding external buffers.

“The medium-term outlook, under the baseline scenario, is for growth to average some four per cent, as large mining sector investments reach full capacity. The current account deficit is expected to improve but will remain high, averaging 15 per cent of GDP.”

Zimbabwe has been encouraged to engage in coordinated discussions with the World Bank and other international financial institutions (IFIs) and called on them to respect the preferred creditor status of IFIs.

The ailing country has also been encouraged to avoid selective debt service, and increase payments to the Fund’s Poverty Reduction and Growth Trust as capacity to repay improves.