Broke Zimbabwean Govt Promises IMF That It Will Reform

The Zimbabwean government has pledged to implement economic, political and governance reforms in its plea to International Financial Institutions to be given a financial bailout package.

In a letter to International Monetary Fund (IMF) Managing Director, Kristalina Georgieva dated April 2, 2020, Finance and Economic Development Minister, Mthuli Ncube, accepted that Zimbabwe made “missteps”, a euphemism for ruinous economic policies which have pushed the country to the verge of implosion. Said Ncube:

The Government of Zimbabwe fully recognizes that requesting a process for arrears clearance and debt rescheduling at this point in time, given the policy missteps during late 2019, is rightfully a cause of concern to our Development Partners.

The Government wants to assure Development Partners of its resolve to implement a comprehensive and credible policy reform agenda.

In this regard, we detail below some important areas of reform that can be incorporated as part of the Arrears Clearance and Recovery Plan, including some reforms that can be targeted as prior actions.

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Ncube highlighted some of the economic reforms he said Harare will implement in order to unlock funding. He wrote:

Economic Reforms

• Adopt an exchange rate regime that is consistent with macroeconomic fundamentals and is market-determined.

• Adopt a foreign exchange buy and sell regime that is transparent, market-driven, and verifiable.

• Eliminate discretion in the allocation of foreign exchange by selling at the highest public bid rate.

• Eliminate all Quasi Fiscal Operations of the Reserve Bank of Zimbabwe (RBZ).

• Eliminate all of RBZ’s direct lending schemes.

• Include all subsidies in the Budget to ensure transparency.

• Contain money supply growth to levels commensurate with the stabilization of the exchange rate and reduction of inflation.

• Table a mild-term 2020 Budget to Parliament, which will reallocate expenditures to the social sectors, including spending requirements for the global pandemic;

• Limit the fiscal costs of the financing of agriculture, ensure transparency, and resolve all the related governance issues;

• Adopt and implement a plan to holistically address the Structural Impediments to sustained private sector-led economic growth and transformation.