This is according to the International Monetary Fund (IMF) who concluded its third and last review of the Southern African country under its Staff Monitored Programme (SMP).
“The mission welcomes Zimbabwe’s decision to start working with the international financial institutions to prepare a plan for clearing the outstanding arrears, as a step toward resolving the country’s debt challenge,” said Domenico Fanizza, mission chief at the IMF.
“The Zimbabwe government has redoubled its efforts to rebalance policies toward a stable macroeconomic environment conducive to private sector-led growth.”
(READ MORE: IMF calls on Zim to restore fiscal sustainability)
However, Fanizza noted that that country still faces tough economic conditions as financial flows remain poor despite the country experiencing a robust agricultural season.
Also, the appreciation of the South Africa, the currency of Zimbabwe’s major trading partner, has caused a liquidity crunch.
(READ MORE: Zimbabwe still high risk but high reward market )
In its external position, Zimbabwe still has low levels of international reserves, a large current account deficit and external arrears.
The IMF said however that despite a large civil service wage increase earlier this year, Zimbabwe’s government took fiscal measures to keep policies and social expenditures on track.
(READ MORE: AfDB says looking at ways to help Zimbabwe cut debt)
“The reform efforts have started to lay the ground for stronger, more inclusive, and lasting economic growth and addressing the economic challenges remains a priority for the government,” said Fanizza.
“It is encouraging that the authorities have come to the conclusion that Zimbabwe cannot address these challenges without the support of the international financial community.”
The authorities’ policy reform agenda, which the IMG will assist with under a proposed new 15 month SMP to end in December 2015, will look at balancing Zimbabwe’s primary fiscal budget, indicating that its government intends to live within its means.
Public spending will be directed towards infrastructure and social outlays and resources will be allocated appropriately.
The country’s debt challenge will be addressed by engaging with all creditors in order to define a clear strategy for clearing arrears with multilateral institutions.
Zimbabwe’s Indigenisation and Economic Empower Laws will be re-looked at in order to encourage domestic and foreign investor partnerships.
“This step will go a long way toward allaying negative perceptions on the security of investments and property rights, provide legal transparency and predictability, and reassure markets of the government’s open invitation to invest in Zimbabwe.”