Zimbabwe’s Minister of Finance and Economic Development, Professor Mthuli Ncube recently wrote a letter to the International Monetary Fund asking for financial assistance.
Ncube’s plea comes when the outbreak of the deadly coronavirus pandemic has affected the country’s revenue inflows.
We present the minister’s letter in full below.
Dear Madam Kristalina Georgieva
Managing Director International Monetary FundREF: DEBT RELIEF AND ARREARS CLEARANCE STRATEGY FOR ZIMBABWE TO SUPPORT THE AUTHORITIES’ RESPONSE TO THE GLOBAL COVID-19 PANDEMIC
Introduction
The global COVID-19 Pandemic is expected to have a devastating health, humanitarian and economic impact on Zimbabwe. Domestic resources to allow the authorities to mitigate the impact of the pandemic are insufficient and access to external financing is severely constrained due to external debt arrears. The Zimbabwean authorities propose a high-level dialogue on mitigating the economic and social downfall from COVID- I 9 Pandemic through transformative arrears clearance and re-engagement plan; short of which the country will suffer a health and economic catastrophe. Immediate financial support for health spending and the normalization of relationships with Zimbabwe’s creditors both bilateral and multilateral will be indispensable for as to be able to respond effectively to the global pandemic. As elaborated below, the Government is committed to undertake critical economic. governance, and political reforms.COVID-19 Pandemic Exacerbates an Already Difficult Economic Situation
With cases increasing and the risks of a major outbreak very high, Zimbabwe must urgently scale up the emergency preparedness and containment response, to ensure that its health sector can respond accordingly and to minimize economic and social disruption from the global pandemic. The Government has prepared a comprehensive response strategy, but is short on the resources required to implement this strategy.The Zimbabwean economy contracted sharply in 2019, amplified by climate shocks that crippled agriculture and electricity generation. Growth is projected to contract further in 2020. with domestic demand expected to be significantly depressed from the lockdown put in place as a preventive measure to stop the spread of the virus. Cumulatively, Zimbabwe’s economy could contract by between 15 to 20 percent during 2019 and 2020 – this is a massive contraction with very serious social consequences. Already, 8.5 million Zimbabweans (half of the population) are food insecure, from Cyclone !dal and successive droughts, health services are inadequate. and poverty levels are rising. These indicators are expected to worsen.
A Case for Immediate Financial Support for Zimbabwe
Zimbabwe desperately needs urgent international support. The global pandemic will take a heavy toll on the health sector, with many being lives lost, and raise poverty to levels not seen in recent times, including worsening food insecurity. A domestic collapse also would ha, potentially adverse regional effects, where spillovers are significant.The international community is seeking to provide significant amounts of financial assistance to LICs to counter COVID-I 9 Pandemic. As part of this. you Madam as the Managing Director of the IMF and the World Bank Group President have called for debt relief for LICs to sup, their responses to the global pandemic. Despite its needs and low-income count, status. Zimbabwe is not eligible to benefit from these initiatives because of its official external debt arrears.
In this regard, Zimbabwe is proposing a high level and urgent dialogue to advance a transformative financial support and arrears clearance plan that can mitigate the looming crisis. Immediate financial sup, for urgent health spending and the normalization of relationships with Zimbabwe’s creditors both bilateral and multilateral, will both be indispensable for us to be able to respond effectively to the global pandemic. The World Bank Group (WBG, estimates a financing gap of almost US$ 1billion in 2020 to finance spending for health, education. food security and social protection. Of this amount, about US$ 200 million is needed for unplanned COVID-19 Pandemic expenditures.
Compensation of Former Farm Owners Affected by the Land Reform Program
• Completion by June 2020 of the exercise to determine the Compensation Figure and signing of the Compensation Agreement with the Compensation Steering Committee of the former farm owners.
Political Reforms
• Government has already repealed POSA;• AIPPA repeal has been approved by Parliament through the approval of the Freedom of Information Bill which awaits the President’s signature;
• Government will issue a time-framed program of aligning all national laws to the 2013 Constitution;
• Government will provide a time-framed program for the omnibus Bill on Electoral Reforms, including setting up of a Parliament, Over-Sight Committee to implement the reforms before the constitutionally mandated next general elections; and
• Government to continue with the process of engaging in National Dialogue.
Coordination
The Government is proposing to have a holistic effort, which is well-coordinated and monitored by the IMF, WBG, and MOB, to ensure consistency in the financial support, near-term macroeconomic stabilization, and long-term sustainable private sector-led growth, and allow us to build a track record towards macro-stabilization and potential future debt relief.
Please be assured of my highest consideration.
Hon. Prof. M. Ncube
Minister of Finance and Economic Development
Cc. Hon. C. Chiduwa, Deputy Minister for Finance and Economic Development; Dr. M.J.M. Sibanda. Chief Secretary to the President and Cabinet; G. Guvamatanga, Secretary for Finance and Economic Development. Dumisani Mahlinza. Executive Director, International Monetary Fund Patrick Amir Imam, Resident Representative for Zimbabwe, International Monetary Fund