14 November 2018

Zimbabwe: IMF Waits On 2019 Budget

The International Monetary Fund (IMF) mission chief to Zimbabwe Mr Gene Leon has said the Fund has taken note of reforms being undertaken by Government and is looking to the 2019 National Budget to get a broader perspective of the reform process.

The IMF delegation is in the country, holding meetings with both public and private sector stakeholders for its annual Article IV Consultations.

In an interview with The Herald Business, Leon said the IMF is taking a macro perspective to ongoing economic reforms in the country.

"When we are going to look at reforms, it's not only the reforms that have been announced but also broader reforms they are expected to announce; how the (2019) Budget will fit into that entire space, and on that basis we will make an assessment.

"It's not ideal to single out one piece of reform to say is it good, bad or indifferent. It's always a package and it is that package that we will be able to say, on average, how it looks in terms of meeting where the country is now, and where you want to take the country," he said.

"We have started meeting with the Minister (of Finance and Economic Development), we will be meeting with him throughout the period. It's never a one-meeting with the minister, he is our key interlocutor because finance is obviously the central aspect of the economy."

Last month, the Government launched the Transitional Stabilisation Programme (TSP), aimed at setting the economy on a recovery path after years of stagnation.

The programme, which runs from October 2018 to December 2020, was announced by Finance and Economic Development Minister Mthuli Ncube.

The TSP acknowledges policy reform initiatives of the new dispensation to stimulate domestic production, exports, rebuilding and transforming the economy to an upper middle-income status by 2030. The reform initiatives have been outlined in various policy pronouncements by President Mnangagwa, from his inaugural address on November 24, 2017, as well as the 2018 National Budget Statement.

According to the policy document, the Transitional Stabilisation Programme will focus on the following factors: stabilising the macro-economy, and the financial sector; introducing necessary policy and institutional reforms to translate to a private sector-led economy; addressing infrastructure gaps, and launching quick-wins to stimulate growth.

The short-term programme will be superseded by two five-year development strategies, with the first one running from 2021-2025, and the second covering 2026-2030. The IMF mission chief to Zimbabwe said they expect more reforms from the new Government.

"I think that is already stated policy. President Mnangagwa, the Minister of Finance and members of his Cabinet have clearly stated that they are looking to undertake a number of reforms.

"It's just that all of the reforms have not been stated publicly and as you have pointed out they have announced a couple, and it's a bit too early to assess individual reforms. "I think the budget will be an opportunity to state a little more how the authorities see things going forward.

Each year, the Bretton Woods institution arranges bilateral Article IV consultations with Zimbabwe and other member countries, with teams being dispatched to collect economic and financial data and discuss economic policy measures with officials.

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