Finance minister Patrick Chinamasa has been fighting a difficult battle to unlock fresh funding for Zimbabwe’s economy from the multilateral lenders such as the International Monetary Fund (IMF) and the World Bank.
Zimbabwe, saddled with a public debt of $8,4 billion as at end of June 2015, has been ostracised by international lenders because of its failure to service overdue loans and the poisoned politics of the last decade.
Since his appointment in 2013, Chinamasa has worked hard to re-engage key institutions such as the IMF, African Development Bank (AfDB) and the World Bank with some limited success.
The IMF has resumed its Staff-Monitored Programme (SMP) for Zimbabwe where the Bretton Woods institution monitors the implementation of the country’s economic programmes on a regular basis.
Under the current 15-month long SMP, Zimbabwe has put up a credible plan to clear its arrears with the international lenders, which is expected to unlock fresh lines of credit needed to resuscitate the economy.
An IMF team was in the country recently to review progress on the reforms and according to the feedback, they are happy with the progress Zimbabwe is making.
The success of the SMP is important to restore confidence in the economy going forward.
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Chinamasa’s efforts got a shot in the arm last week when the AfDB committed to financing a scheme to help Zimbabwe clear its $601 million debt with the continental lender.
The AfDB said it was ready to help Zimbabwe clear its arrears by the end of December 2016.
Once the arrears are cleared, Zimbabwe would unlock opportunities for fresh funding from the AfDB.
However, the country would still have to liquidate debts to the IMF and World Bank for the rehabilitation to have some impact, but this will not be an easy task under the obtaining economic situation in the country.
Zimbabwe is expected to table its debt clearance strategy at the IMF/World Bank annual meetings in Lima, Peru next month amid high hopes that the two institutions would lend their support to the country’s efforts to exit the vicious circle.
Chinamasa needs the support of the whole government for him to succeed, but this does not seem to be the case at the moment.
Last week War Veterans minister Christopher Mutsvangwa was reported to have taken a dig at Chinamasa at a meeting in Mutare for engaging the IMF.
Mutsvangwa, without providing any evidence, reportedly claimed that the IMF wanted to remove President Robert Mugabe and replace him with opposition leader Morgan Tsvangirai.
The untested allegations have been raised in the past after Zimbabwe was excluded from IMF and World Bank funding, but with time it has been proven that it was mere political banter.
For Zimbabwe to rise from the economic quagmire it finds itself in, the government has to refrain from unhelpful rhetoric that would endanger Chinamasa’s efforts to re-engage the international community.
The government also needs to reciprocate gestures by the AfDB and IMF by putting in place policies that promote positive economic growth and encourage sustainable investment.
Funding from these institutions on its own would not revive the economy, but the government has to make the environment conducive for private sector-led growth.
