Zim could miss IMF targets

HARARE - Zimbabwe could for the second time miss the International Monetary Fund (IMF)’s Staff Monitored Programme (SMP) targets due to deteriorating economic conditions in the country.

The hard-pressed country is currently implementing the recommended programme under which it is required to enforce sound economic policies.

SMP also compels the authorities to increase diamond revenue transparency, reduce financial sector vulnerabilities and restructure the central bank, among other demands.

In January, IMF approved a six-month extension of the programme to June to give the President Robert Mugabe-led administration time to deliver on outstanding commitments.

However, Finance minister Patrick Chinamasa yesterday said government was facing mounting economic challenges thereby affecting its ability to meet the Bretton Woods institution’s targets within the deadline.

“It’s clear at this stage, to everybody’s knowledge, that we have not been able to address some of the

issues we discussed last year such as employment costs as a proportion of the budget,” he said.

“And I have told them (the IMF team) that with respect to employment costs we cannot address those in the short to medium term. They require a longer process,” Chinamasa said, adding that the issues could not be addressed overnight.

He said he was not willing to cut government expenditure through the retrenchment of civil servants.

“We are hoping to address employment costs in the long term through creating growth in the economy,

increasing the revenue base and increasing the gross domestic product (GDP) so that employment costs can take their appropriate portion within a bigger cake.”

In the past week, Chinamasa was in discussions with an IMF team which came into the country to evaluate progress of the SMP implementation.

If successful, the programme could relieve the heavily indebted country by helping clear its $10 billion external debts and subsequent access to new credit lines.

Chinamasa noted that most of the issues prescribed by the SMP require wider consultations and hence will take time.

“There are also some structural issues which we thought we would have made more progress by now. For example, we are looking at amendments to the Mines and Mineral Act in order to create a legal template which would be conducive for viability in the mining sector. Progress is currently under way and it will take time address these concerns,” he said.

The scheme is voluntary and does not necessarily mean the IMF backs the country’s economic programme, but it represents a key step towards Zimbabwe’s re-engagement with international lenders.

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