An International Monetary Fund (IMF) staff mission, led by Alfredo Cuevas, met with Zimbabwean authorities in Harare from March 12 to 26 to discuss the 2014 Article IV Consultation, and combined first and second reviews under the Staff-Monitored Programme (SMP).
The SMP programme was approved by IMF management in June 2013 for the period April-December last year. During the October 2013 annual meetings of the IMF and World Bank, the new Zimbabwe government reiterated its commitment to it and re-engagement with the IMF and other multilateral institutions.
The IMF team held discussions with cabinet secretary Misheck Sibanda, ministers Patrick Chinamasa, Walter Chidhakwa, Francis Nhema, advisor to President Robert Mugabe Timothy Stamps, acting Reserve Bank governor Charity Dhliwayo and other senior government officials.
Besides authorities, it also met with labour, business, and civil society, as well as development partners.
Discussions covered recent economic developments and short and medium-term outlook and risks for Zimbabwe; implementation of policies and reforms under SMP; measures to restore fiscal and external sustainability, enhancing financial sector stability, and unlocking the country's potential for sustained growth and poverty reduction.
As a result, there was an understanding on a package of policy measures and reforms to be monitored in the context of SMP through June.
Further discussions will continue on the sidelines of the annual IMF and World Bank Spring meetings early this month to ensure realisation of SMP deliverables. The IMF mission report will be considered by the executive board in mid-June when an update on the SMP will be done.
While this is encouraging, authorities must now take practical and urgent measures to arrest the current economic deterioration. Government has been the weak link as policy-makers are just hand-wringing; doing nothing useful beyond ZimAsset rhetoric.
In the short-term, government must act to live within its means.
In other words, it must realign revenues and expenditures, while putting in place policies to attract investment and create jobs.
Zimbabwe also needs to pursue strong macro-economic policies, including building up fiscal and external buffers, increasing budgetary resources going to non-personnel related spending, and implementing structural reforms to attract investment.
There is also need to improve the business climate, strengthen governance institutions, including by ensuring transparency of the minerals regime.
The country must engage its creditors on the long-standing debt arrears problem.
In recent years, Zimbabwe's economy recovered following more than a decade of decline which culminated in a meltdown and untold hyperinflation, but the rebound phase is over. Growth is rapidly decelerating with serious consequences.
Real GDP in 2013 was estimated at just above 3%, a dramatic plunge from 10,5% in 2012.
This shows the economic situation is badly deteriorating and something must be done urgently to mitigate the negative impact of the chronic liquidity crunch and political uncertainty, as well as unworkable policies, mismanagement and widespread corruption.