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Zimbabwe hopeful on IMF programme

ZIMBABWE is hopeful it will fulfill the set targets on the International Monetary Fund (IMF) supervised economic reform programme, Finance minister Patrick Chinamasa said last week.

ZIMBABWE is hopeful it will fulfill the set targets on the International Monetary Fund (IMF) supervised economic reform programme, Finance minister Patrick Chinamasa said last week.


In June, the IMF agreed on a Staff Monitored Programme (SMP) on Zimbabwe that will run until December with the country setting itself some benchmarks that have to be attained during the tenure of the supervised programme.

Zimbabwe has so far missed a June 30 deadline of ensuring that diamond revenue from Marange flows into Treasury.

Zimbabwe had told the IMF that it would issue a Statutory Instrument by the end of June 2013, that establishes a clear formula for the calculation and remittance of any dividends to government from those entities it holds shares in.

“This is an important step towards ensuring that all diamond revenue is remitted to Treasury, in keeping with the government’s commitment under the Diamond Policy. In addition, all rough diamonds produced shall be sold through a government-appointed agent,” Zimbabwe said in a letter to the IMF managing director, Christine Lagarde.

This has not been done amid indications that the country will seek an extension of the SMP, arguing that it had lost three months engrossed in election-related issues that had virtually paralysed government operations.

Chinamasa said there were not expecting an extension and would wait for the review of the SMP when it ends in December.

“My understanding is that it [SMP] is subject to a review at the end of the year. A review means that they have to look at what we promised to do and to what extent we have done it,” he said.

“Don’t anticipate that [seeking an extension].”

Chinamasa said in some areas, Zimbabwe was far ahead but a bit behind in other benchmarks.

“If there are good reasons why we have fallen behind, they [IMF] will understand that,” Chinamasa said.

“Don’t anticipate the review. Let’s wait until we reach there.”

The SMP — an informal agreement between country authorities and the fund staff to monitor the implementation of the authorities’ economic programmes — came after intensive lobbying by the inclusive government as part of its re-engagement with the global lender.

The SMP focusses on putting public finances on a sustainable course, while protecting infrastructure investment and priority social spending, strengthening public financial management, increasing diamond revenue transparency, reducing financial sector vulnerabilities, and restructuring the central bank.

Government also promised the IMF that by the end of the month, it would submit to cabinet amendments to the Precious Stones Trade Act to incorporate the principles contained in the Diamond Policy. The amendments would be presented to Parliament by end of December.

Government told the IMF it would submit a bill before parliament by the end of the month meant to take over the debt owed by the Reserve Bank of Zimbabwe (RBZ).

The central bank owes creditors over US$1,1 billion.

The inclusive government had been working on the draft RBZ Debt Relief Bill but seems to have abandoned the project in the run up to the July 31 harmonised elections.

Zimbabwe has been working on a re-engagement programme, building bridges with international financial institutions, to help finance the growth of the economy on the increase since the use of multiple currencies in 2009.

However, the re-engagement exercise has been dampened by the over US$10,7 billion external debt to creditors including multilateral institutions.

Its debt to multilateral financial institutions means that it cannot access cheap funds on the international financial markets.

Zimbabwe owes about US$800 million to the African Development Bank (AfDB) in which US$528 million is in arrears.

The country owes about US$1,4 billion to the World Bank. Its arrears to the bank are US$926 million.

The country’s total debt to IMF is US$124 million.