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The International Monetary Fund (IMF) said that Zimbabwe’s new currency, called Zimbabwe Gold (ZiG), has helped end a period of economic instability.
Before the ZiG, Zimbabwe had used the Zimbabwe dollar, which lost a lot of value very quickly. This caused prices to rise sharply, especially in the first three months of 2024.
Following a recent mission to Zimbabwe, the IMF said that if macro-stabilisation is sustained, the cumulative inflation for the remainder of the year would be about 7%, a figure Zimbabwe has not achieved in years.
An IMF staff team led by Wojciech Maliszewski conducted a second mission to Harare on June 18-27, 2024, to conclude the 2024 Article IV Consultation The IMF said:
<blockquote>
Against this background, the Reserve Bank of Zimbabwe (RBZ) introduced in April 2024 a new currency—the Zimbabwe Gold (ZiG).
The ZiG official exchange rate has so far remained stable, ending a bout of macroeconomic instability in the first 3 months of the year.
Assuming that macro-stabilization is sustained, cumulative inflation in the remainder of the year is projected at about 7 per cent.
</blockquote>
In an interview with <a href="https://www.voanews.com/a/imf-urges-zimbabwe-to-tackle-corruption-for-economy-to-pick-up-/7677299.html">VOA</a>, Persistence Gwanyanya, a member of the Reserve Bank of Zimbabwe Board, said:
<blockquote>
We think that there has been some notable improvements with regard to … fiscal accountability.
Whilst there are isolated cases of corruption that we acknowledge, the overall picture is that there has been significant improvement in fiscal management in the country. And unsurprisingly, we continue to improve. 
But to achieve the ambitions, we reduce the leakages, we improve… accountability further in the economy.
</blockquote>
The IMF said Zimbabwe’s economic governance still has significant weaknesses and said corruption poses a risk to economic performance that needs to be addressed.
Loice Matanda-Moyo, Zimbabwe’s prosecutor general, and the former chairperson of the Zimbabwe Anti-Corruption Commission, last month said that corruption costs the country nearly US$2 billion annually.
Godfrey Kanyenze, an economist and founding director of the Labour and Economic Development Research Institute of Zimbabwe, told VOA that corruption has to be dealt with if the country’s economy is to improve. He said:
<blockquote>
Corruption is a cancer that has to be dealt with, we need political will to address this particular issue and there is to be a price for corrupt activities.
The culture of impunity must be replaced by zero tolerance for corruption, as is the case in other countries where the state has played a leadership role.
</blockquote>
Launched on 05 April 2024, the ZiG has maintained a near original peg value to the US dollar after starting at 13,56 and rising marginally to the current 13,70.
Yesterday, the Zimbabwe Statistics Agency (ZIMSTAT) said that the month-on-month ZiG inflation rate for June 2024 was 0 per cent, meaning prices have remained constant on average between May and June.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Pindula News

IMF Declares ZiG Currency Stabilised Zimbabwe's Economy

An International Monetary Fund (IMF) consultation mission will visit Zimbabwe later this month to assess the country’s economic performance and the newly introduced currency, the Zimbabwe Gold (ZiG), reported <a href="https://www.newzimbabwe.com/imf-delegation-to-assess-new-zig-currencys-impact-on-zimbabwes-economy/">NewZimbabwe.com</a>.
The IMF mission is expected in the country between June 18 to June 27 for Article IV consultations.
IMF spokesperson, Julie Kozack, confirmed the routine consultations, saying the the Bretton Woods institution is ready to support Zimbabwe’s efforts to restore macroeconomic stability. Said Kozack:
<blockquote>
On Zimbabwe, our staff is expected to conduct the Article 4 consultations later this month.
Part of this Article 4 consultation will assess the entire economy as we always do, but also we will be looking at the new currency arrangement, the ZiG, and this Article 4 mission will give us the opportunity to do that.
Zimbabwe did introduce a new currency backed by a basket of foreign currencies and other assets, including gold and of course we stand ready to discuss these with the authorities and to support their efforts to restore macroeconomic stability.
</blockquote>
ZiG has been the official currency since April 8, 2024, and is the sixth currency to be introduced in 15 years by the Zimbabwean government.
According to a May 2024 report by the Zimbabwe National Statistical Agency (ZIMSTAT), the introduction of the ZiG resulted in a 0.6% drop in month-on-month inflation.
However, the Institute of Security Studies (ISS) warned that Zimbabwe’s new ZiG is doomed by an overall lack of transparency. It said:
<blockquote>
Economic mismanagement has stripped citizens’ trust in the government and threatens the new currency’s viability.
The struggle to stabilise Zimbabwe’s economy continues, with no signs of relief for ordinary citizens.
The recently introduced currency, ZiG, seems destined to suffer the same fate as the five previous attempts to create a local currency.
</blockquote>
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

IMF Team To Assess ZiG's Impact On Zimbabwe’s economy

The International Monetary Fund (IMF) welcomed Zimbabwe’s introduction of a new gold-backed currency, the ZiG, as an important step.
In an emailed response to <a href="https://www.bloomberg.com/news/articles/2024-05-23/-zig-usd-imf-calls-zimbabwe-switch-to-gold-backed-zig-an-important-step">Bloomberg</a> questions, a spokesperson for the IMF said:
<blockquote>
The introduction of ZiG represents an important policy action accompanied by several complementary policy changes — including monetary, exchange rate, and fiscal policy measures.
</blockquote>
The IMF spokesperson also said that the lender will send a team to Zimbabwe in late June and this “will be an opportunity to discuss and look at the performance of the new currency arrangement”.
ZiG was launched on 05 April 2024, becoming Zimbabwe’s sixth attempt in the last 15 years to establish a functioning currency after previous efforts failed.
The Reserve Bank of Zimbabwe said it will not print any more ZiG unless they are backed by reserves and also pledged not to finance government spending by printing money.
Since the ZiG’s launch, the central bank has reset its benchmark interest rate to 20% from 130%.
The RBZ’s Financial Intelligence Unit (FIU) and the police have launched a crackdown on illegal money changers and also threatened to fine anyone not trading in the ZiG at the official exchange rate.
However, the central bank’s Deputy Governor Innocent Matshe told Bloomberg that while there’s been enforcement, market forces will determine the ZiG’s value. He said:
<blockquote>
We don’t depend on enforcement. We want the currency to find itself in the market as it should and build its reputation. It has managed to hold its value steadily.
</blockquote>
On Thursday, the ZiG reached its highest level against the United States dollar, touching 13.21 per dollar, which is 2.6% above where it began trading on April 8.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

IMF Calls Zimbabwe's Switch To A Gold-backed Currency An "Important" Step

An International Monetary Fund (IMF) staff team led by Wojciech Maliszewski was on a visit to Harare, Zimbabwe from 31 January to 14 February 2024 to discuss the authorities’ request for a Staff Monitored Programme (SMP) and commence the 2024 Article IV Consultation.
An IMF Staff Monitored Programme, or SMP, is an informal agreement between an IMF member country and IMF staff to monitor the member country’s economic programme.
After the IMF mission, Maliszewski issued the following statement:
<blockquote>
Economic activity in Zimbabwe continues to show resilience in the face of currency instability and high inflation.
GDP growth is estimated at 5.3 percent in 2023, on the back of an expansion in agriculture and mining, and—buoyed by related foreign currency inflows and by remittances—in the highly-dollarized domestic trade and services.
Growth is expected to decelerate to about 3¼ percent in 2024, partly reflecting the impact of a drought on agriculture production and lower commodity prices.
These factors are also expected to reduce foreign currency inflows, but remittances will likely remain strong, and the current account is projected to be in small surplus.
This should support liquidity in the dollarized part of the economy, sustaining growth in domestic trade, services, and construction.
However, local-currency (ZWL) instability intensified: the official exchange rate has depreciated by about 95 percent since the beginning of December 2023; the gap to the parallel market rate remains wide (above 30 percent); and ZWL inflation is still very high.
This instability weighs on sentiment, while exchange rate restrictions (prescribing retailers to use the official ZWL exchange rate with up to a 10 percent margin—inflating US dollar prices) continue to be a burden on the formal sector.
They promote informality, which erodes the tax base and undermines longer-term growth prospects.
Risks remain skewed to the downside, and the outlook will crucially depend on progress toward macroeconomic stabilization and transformational structural reforms.
The authorities have requested a new Staff Monitored Program (SMP) to support their stabilization efforts and re-engagement with the international community through building a track record of sound economic policies. The mission was a step in the preparations for an SMP and initiated Article IV consultations.
Discussions covered policies to restore macroeconomic stability and improve growth prospects, focusing on addressing the sources of fiscal pressures including quasi-fiscal operations (QFOs) of the Reserve Bank of Zimbabwe (RBZ); liberalizing the foreign exchange market and establishing an effective framework for exchange rate and monetary policies; and progressing on reforms to improve economic governance and reduce corruption vulnerabilities.
The mission welcomes the authorities’ strong resolve to address the sources of fiscal pressures. The transfer of RBZ’s external liabilities related to the QFOs to the Treasury—which include long-term loans, short-term liabilities, and the “blocked funds”—represents an important step in this regard.
However, the larger-than-anticipated costs of servicing these obligations will open a financing gap in the 2024 budget.
Discussions focused on identifying options to close this gap in a way that avoids inflationary financing, and the mission encourages the authorities to develop and implement a comprehensive plan to this end.
This should be accompanied by ensuring that the appropriate legal framework is in place to complete the transfer.
Restoring macroeconomic stability will also require addressing other sources of fiscal pressures, including those emanating from other non-core (not related to the goal of price and financial stability) operations of the RBZ and from SOEs.
The mission encourages the authorities to accelerate the FX market reform by promoting a more transparent and market-driven price discovery in the official exchange rate and by removing existing exchange restrictions and distortions.
In particular, the restriction on the 10 per cent allowable trading margin for pricing domestic transactions should be eliminated.
The FX market reform should be accompanied by the establishment of an effective framework for exchange rates and monetary policies.
Establishing such a framework requires careful preparations, including, among other steps, comprehensively addressing underlying sources of fiscal pressures. The RBZ Act should be amended, including narrowing its legal mandate to core functions.
Structural reforms aimed at improving the business climate, strengthening economic governance and reducing corruption vulnerabilities are key for promoting sustained and inclusive growth and would bode well for supporting Zimbabwe’s development objectives embodied in the country’s National Development Strategy 1 (2021-2025).
In this context, the mission encourages the authorities to ensure that the corporate governance arrangement, transparency and financial reporting, and accountability oversight of the recently established Mutapa fund are in line with international standards and good practices.
Sustainable development will also require the resolution of the debt overhang. International re-engagement remains critical for debt resolution and access to financial support.
In this context, the authorities’ re-engagement efforts, through the Structured Dialogue Platform, are key for attaining debt sustainability and gaining access to concessional external financing.
The IMF maintains an active engagement with Zimbabwe and continues to provide policy advice and extensive technical assistance in the areas of revenue mobilization, expenditure control, financial supervision, debt management, economic governance and anti-corruption, and macroeconomic statistics.
However, the IMF is currently precluded from providing financial support to Zimbabwe due to its unsustainable debt situation—based on the IMF’s Debt Sustainability Analysis (DSA)—and official external arrears.
An IMF financial arrangement would require a clear path to comprehensive restructuring of Zimbabwe’s external debt, including the clearance of arrears and a reform plan that is consistent with durably restoring macroeconomic stability; enhancing inclusive growth; lowering poverty; and strengthening economic governance.
The IMF staff held meetings with the Minister of Finance and Economic Development Hon. Professor Mthuli Ncube, the Deputy Minister of Finance and Economic Development Hon. David Mnangagwa, the Reserve Bank of Zimbabwe Governor Dr John Mangudya, other senior government and RBZ officials, the private sector, civil society organizations, and Zimbabwe’s development partners.
The IMF staff wishes to thank the Zimbabwean authorities and other stakeholders for the constructive discussions and support during the 2024 Article IV consultation mission.
</blockquote>
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

IMF Projects Zimbabwe's Economic Growth To Decelerate To 3.25% In 2024

A team from the International Monetary Fund (IMF) recently concluded a staff visit in Harare that ran from 18 to 25 to discuss recent economic developments and the economic outlook.
The IMF staff team, which was led by Wojciech Maliszewski, projected Zimbabwe’s economy to grow by around 4.8 percent in 2023
At the conclusion of the IMF mission visit, Maliszewski issued the following statement:
<blockquote>
Zimbabwe’s economy has continued its post-COVID recovery, but enhancing its longer-term growth potential would require strong reform efforts.
Real GDP is projected to grow by around 4.8 percent in 2023, supported by strong activity in the mining sector and—reflecting the beneficial impact of structural reforms—in the agriculture and energy sectors.
Growth is expected to slow to 3.5 percent in 2024 due to weaker global demand for minerals and a weather-related slowdown in agriculture.
As external conditions worsen, the economic outlook will even more crucially depend on progress toward macroeconomic stabilization and transformational structural reforms.
Local-currency (ZWL) inflation and exchange rate pressures have abated in recent months, following significant price increases and exchange rate depreciation in the second quarter of 2023.
The IMF mission notes the authorities’ recent efforts to stabilize the foreign exchange market and lowering inflation through the tightening of ZWL liquidity conditions.
The mission welcomes the removal of surrender requirements on domestic sales in FX. The announced plan for the transfer of RBZ FX liabilities to the Treasury is also welcome.
Nevertheless, the parallel FX market premium is large at above 30 percent, and ZWL inflation remains high. The fiscal deficit, excluding QFOs, is projected at 2.3 percent of GDP in 2023.
Key economic policy reforms identified in previous Article IV consultations remain paramount to fully restore macroeconomic stability.
First, comprehensively addressing the RBZ’s quasi-fiscal operations (QFOs) remains imperative to mitigate liquidity pressures and thus re-anchor inflation expectations.
These measures should be complemented with an enhanced liquidity management framework, including the use of appropriate interest-bearing instruments by the RBZ to mop up excess liquidity.
Second, the consolidated fiscal stance, including QFOs, should be aligned with the short-term stabilization objectives.
Third, there is an urgent need to accelerate the FX market reform, by allowing more flexibility in the official exchange rate through a more transparent and market-driven price discovery; removing the restrictions on the exchange rate at which banks, authorized dealers, and businesses can transact; and further minimizing export surrender requirements.
Structural reforms aimed at improving the business climate and reducing governance vulnerabilities are key for promoting sustained and inclusive growth and would bode well for supporting Zimbabwe’s development objectives embodied in the country’s National Development Strategy 1 (2021-2025).
Sustainable development will also require a resolution of debt overhang. The Fund continues to provide policy advice and extensive technical assistance in the areas of revenue mobilization, expenditure control, financial supervision, debt management, economic governance, and macroeconomic statistics.
However, the IMF is precluded from providing financial support to Zimbabwe due to unsustainable debt—based on the IMF’s Debt Sustainability Analysis (DSA)—and official external arrears.
A Fund financial arrangement would require a clear path to comprehensive restructuring of Zimbabwe’s external debt, including the clearance of arrears; and a reform plan that is consistent with durably restoring macroeconomic stability, enhancing inclusive growth, lowering poverty, and strengthening economic governance.
International re-engagement remains critical for debt resolution and access to financial support. In this regard, the authorities’ re-engagement efforts—through the Structured Dialogue Platform—are well noted and are vital for attaining debt sustainability and gaining access to external financing.
The outcome of this staff visit will serve as a key input in the preparations for a Staff Monitored Program (SMP) and the next Article IV consultation.
The IMF mission held meetings with the Minister of Finance, Economic Development and Investment Promotion Hon. Professor Mthuli Ncube, his Permanent Secretary Mr. George Guvamatanga, the Reserve Bank of Zimbabwe Governor Dr. John Mangudya, the Deputy Chief Secretary to the President and Cabinet Mr. Willard Manungo, other senior government and RBZ officials, representatives of the private sector, civil society, and Zimbabwe’s development partners.
The IMF staff wishes to express its gratitude to the Zimbabwean authorities and stakeholders for the constructive and open discussions and support during the mission.
</blockquote>
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

IMF Staff Concludes Staff Visit to Zimbabwe

Parliament has ordered the Ministry of Primary and Secondary Education to explain how it used US$10 million from the International Monetary Fund (IMF).
The Education Ministry was allocated US$10 million in Special Drawing Rights (SDRs) from the (IMF).
Parliamentary Portfolio Committee on Primary and Secondary Education chairperson Torerai Moyo told <a href="https://www.newsday.co.zw/thestandard/local-news/article/200010084/parly-demands-answers-from-education-ministry">NewsDay</a> that Education ministry officials failed to fully explain how they used their allocation when they appeared before the House. He said:
<blockquote>
There was nothing on the utilisation of the US$10 million Special Drawing Rights; I told them to bring the draft after the holiday.
</blockquote>
On 23 August 2021, Zimbabwe received Special Drawing Rights (SDRs) under the general allocation amounting to SDR677,436,012.00 (approximately US$958 million), from the International Monetary Fund (IMF).
According to Veritas, the allocation provided a huge stimulus to the Zimbabwean economy, following the devastating impacts of the COVID-19 pandemic and has assisted Zimbabwe in its post-COVID-19 recovery path.
The Government said part of the funding went to the manufacturing, health, education, agriculture and mining sectors.
The amount of SDRs that are allocated to each country is based on their individual IMF quotas.
IMF quotas are based broadly on the relative economic position of the country in the world economy.
More: <a href="https://zero.pindula.co.zw/">Pindula News</a>

Parliament Demands Answers From Education Ministry Over US$10 Million IMF Funds

An International Monetary Fund (IMF) staff team conducted a mission to Harare from 1 to 15 December 2022, in the context of the 2023 Article IV Consultation.
At the conclusion of the IMF mission, the staff team leader, Dhaneshwar Ghura issued the following statement:
<blockquote>
The government provided a swift response to the COVID-19 pandemic, supporting businesses, livelihoods, and the health sector, resulting in real output growth of 8.5 percent in 2021, underscoring the economy’s resilience.
Renewed domestic and external shocks (inflation surge, erratic rainfall, electricity shortages, and Russia’s war in Ukraine) are, however, adversely affecting economic and social conditions.
Real GDP growth is thus expected to decline to about 3.5 percent in 2022. These multiple shocks will continue to weigh on Zimbabwe’s growth prospects.
Currency and price pressures, which emerged earlier this year largely owing to a spike in broad money growth and an official exchange rate misaligned with market fundamentals, are subsiding.
Annual inflation, which had increased to 285 percent in August 2022, has been decelerating since, a trend which if sustained by appropriate policies, would go a long way in anchoring inflation expectations.
The IMF mission notes the authorities’ efforts to stabilize the local foreign exchange market and lower inflation.
In this regard, the swift tightening of monetary policy along with greater official exchange rate flexibility and a prudent fiscal stance are policies in the right direction and have contributed to a narrowing of the premia in the parallel foreign exchange market.
In addition, the authorities have identified large payments to suppliers, the result of over-invoicing, as a source of pressure on the parallel market and in response have launched value-for-money audits and introduced measures to strengthen procurement regulations. 
Uncertainty remains high, however, and the economic outlook will depend on the implementation of key policies and the evolution of external shocks.
A near-term policy imperative is to sustainably anchor macroeconomic stability.
In this context, Fund staff recommend accelerating the liberalization of the FX market, including through the removal of restrictions on the exchange rate at which banks, authorized dealers, and businesses transact; addressing the Reserve Bank of Zimbabwe’s quasi-fiscal operations to mitigate liquidity pressures; maintaining an appropriately tight monetary policy stance to durably restore macroeconomic stability and ensure social stability; restoring the effectiveness of the monetary policy, including through the use of appropriate interest-bearing instruments to mop up liquidity and winding down the use of gold coins; and maintaining a prudent fiscal stance.
Fiscal policy should aim at containing the deficit in line with available non-inflationary financing and creating fiscal space for critical spending.
This can be achieved by mobilizing additional revenues, based on tax policy reforms, and by scaling back non-priority outlays while strengthening public finance management.
The financial oversight of the state-owned enterprise (SOEs) by the Treasury should be further strengthened in order to minimize fiscal risks.
In the context of a tight monetary policy, enhanced regulatory oversight is required to ensure financial sector resilience.
Addressing the remaining Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) weaknesses would strengthen banks’ resilience and effectiveness.
Reforms to economic institutions and the governance and anti-corruption frameworks are critical for strengthening the foundations for private sector development and inclusive growth.
“Ensuring durable macroeconomic stability and revitalizing structural reforms would support Zimbabwe’s development objectives as embodied in the country’s National Development Strategy 1 (2021-2025).
International re-engagement remains critical for debt resolution and access to external financial support.
In a bid to advance the re-engagement process, the authorities have adopted an Arrears Clearance, Debt Relief and Restructuring strategy; continued token payments to external creditors; and launched a Dialogue Platform to foster discussions among the various stakeholders.
Zimbabwe has been a Fund member in good standing since it cleared its outstanding arrears to the IMF in late 2016.
The Fund provides extensive technical assistance in the areas of revenue mobilization, expenditure control, monetary and exchange rate policy, banking sector, debt management, governance, and macroeconomic statistics.
However, the IMF is precluded from providing financial support to Zimbabwe due to official external arrears and unsustainable debt.
A Fund financial arrangement would require a clear path to a comprehensive restructuring of Zimbabwe’s external debt, including the clearance of arrears; and a reform plan that is consistent with durably restoring macroeconomic stability, enhancing inclusive growth, lowering poverty, and strengthening economic governance.
The IMF staff held meetings with Minister of Finance and Economic Development Honorable Professor Mthuli Ncube, his Permanent Secretary Mr. George Guvamatanga, Reserve Bank of Zimbabwe Governor Dr. John Mangudya, Deputy Chief Secretary to the President and Cabinet Mr. Willard Manungo, other senior government and RBZ officials, representatives of the private sector, civil society, and Zimbabwe’s development partners.
The IMF staff would like to thank the Zimbabwean authorities and other stakeholders for constructive discussions and support during the 2023 Article IV consultation mission.
</blockquote>

IMF Staff Concludes Article IV Mission to Zimbabwe | Full Statement

The International Monetary Fund (IMF) says Zimbabwe’s economy grew 6.3% in 2021 on the back of a bumper maize harvest, strong performance in mining, and buoyant construction.
Last year, the IMF had projected GDP growth at 5.1%, but on Thursday the Fund said that recovery had been faster than expected.
Zimbabwe’s economy contracted by 11.7 per cent between 2019 and 2020 due to Cyclone Idai, drought, and the COVID-19 pandemic as well policy missteps in 2019, according to the IMF.
In a statement after its latest routine Article IV consultation with Zimbabwe, the IMF executive board said:
<blockquote>
Real GDP rose by 6.3% in 2021 reflecting a bumper maize harvest, strong pickup in mining, and buoyant construction.
A tighter policy stance since mid-2020 (relative to 2019) has contributed to lowering inflation to 60.7 per cent (y/y) at the end-2021.
Fiscal policy was tightened in 2020‑21, reflecting increased revenues and lowered spending.
The current account balance turned into a surplus during 2019-21, reflecting favourable metal prices, lower imports, and a surge in remittances.
</blockquote>
The IMF however, noted that inflation has remained in double digits and wide parallel foreign exchange market premia have continued.
The fund also observed that poverty has risen and about a third of the population is at risk of food insecurity.
Zimbabwe’s economic recovery is expected to continue in 2022, with growth projected at about 3.5 per cent and 3 per cent over the medium term.
The IMF commended Zimbabwe for its response to the COVID-19 pandemic when it first emerged in 2019, saying this helped to reduce the impact of the pandemic. The IMF said:
<blockquote>
The authorities’ swift response to the pandemic, including through containment measures and economic and social support, helped contain its adverse impact.
</blockquote>
<h2>Recommendations by the IMF to Zimbabwean authorities</h2>
<ul>
<li>implement the necessary reforms that would foster higher, more inclusive growth and pave the way for reengagement with the international community.</li>
<li>enhance revenue mobilization, including broadening the tax base and improving tax administration and compliance.</li>
<li>accelerating reforms of state-owned enterprises and enhancing fiscal controls will be critical to limit fiscal risks.</li>
<li>use the SDR allocation prudently and transparently.</li>
<li>enhance debt management and transparency.</li>
<li>increase the operational independence of the central bank, discontinue its quasi-fiscal operations, and improve its coordination with the fiscal authorities</li>
<li>prioritise structural reforms to improve the business climate and build resilience to climate change.</li>
</ul>
<h4>More: <a href="https://www.imf.org/en/News/Articles/2022/03/24/pr2288-zimbabwe-imf-executive-board-concludes-2022-article-iv-consultation">IMF</a></h4>

Zimbabwe’s Economy Grew 6.3% In 2021, New IMF Report Says

Reserve Bank of Zimbabwe (RBZ) governor John Magudya said that the Central Bank would use part of US$961 million it got from the International Monetary Fund (IMF) to stabilise the Zimbabwe dollar.
The local unit has plunged in the past few weeks, with the official exchange rate now at US$1:ZWL$98, from US$1:ZWL$83 two weeks ago.
On the parallel market, the local currency is trading at ZWL$185 to the greenback from ZWL$130:US$1 two weeks ago.
Mangudya told Business Times in an interview that US$500 million from the Special Drawing Rights (SDRs) has been set aside to shore up the local currency. He said:
<blockquote>
As we have said before, the majority of the money [US$500m] will help to increase the foreign exchange reserves position and buttress the stability of our domestic currency.
The balance will be for COVID-19 response and support the social sectors such as health, education and the vulnerable groups together with the productive sectors that include industry, agriculture and mining.
But over and above everything the fund will support our domestic currency and macro-economic stability.
</blockquote>
<h4>More: <a href="https://businesstimes.co.zw/us500m-to-stabilise-zimdollar/">Business Times</a></h4>

US$500 Million To Anchor Zimbabwe Dollar - RBZ

Finance and Economic Development Minister Mthuli Ncube said the government will use more than half of the $961 million allocated by the International Monetary Fund in the form of special drawing rights to support the Zimbabwe dollar.
Speaking to Bloomberg on Tuesday, the same day he (Ncube) and Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya confirmed the almost US$1 billion allocation from the Bretton Woods institution, Ncube said:
<blockquote>
For the support of the currency, we want to hold back about $500 million.
</blockquote>
Zimbabwe abandoned a 1:1 peg between the RTGS dollar, a precursor of the reintroduced Zimbabwe dollar, and the greenback in February 2019.
The currency now trades at 85.82 to the United States dollar and as high as 150 on the black market, a plunge that’s made it difficult for the government to get it accepted locally, and it’s generally not tradable outside the country.
Zimbabwe abandoned its currency in 2009 after inflation rose to 500 billion per cent, according to the IMF, and legalised trade in a range of currencies including the US dollar and South African rand.
Ncube said the country’s remaining SDRS will be used to support the acquisition of COVID-19 vaccines, investments in schools, hospitals and roads and other priorities.
Revolving funds will also be set up to help manufacturers and mining companies buy new equipment, and to revive the horticulture industry by encouraging the cultivation of roses, macadamia nuts and blueberries, Ncube added.
More: <a href="https://www.bloomberg.com/news/articles/2021-08-24/zimbabwe-to-use-more-than-half-of-imf-funds-to-prop-up-currency">Bloomberg</a>

Mthuli Wants To Use Part Of IMF Funding To Support Zim Dollar

The Ministry of Finance and Economic Development and the Reserve Bank of Zimbabwe (RBZ) have announced that Zimbabwe has received SDR 677.4 million (USD961 million) from the International Monetary Fund (IMF).
In a joint statement this Tuesday, Minister of Finance and Economic Development Mthuli Ncube, and RBZ Governor John Mangudya expressed gratitude to the IMF for the disbursement and pledged to use the funds transparently. The statement read:
<blockquote>
We would like to advise the public that Zimbabwe has received SDR 677.4 million (USD961 million) from the International Monetary Fund (IMF) under the IMF’s USD650 Billion SDR allocation earmarked to provide additional liquidity to the global financial system.
The funds were deposited in the Reserve Bank of Zimbabwe account with the IMF for value 23 August 2021.
The immediate impact of this support from the IMF is to increase the foreign exchange reserves position of the country by US$961 million. This will go a long way in buttressing the stability of our domestic currency.
The funds will be used prudently, with utmost accountability, to support the social sectors namely health, education, and the vulnerable groups; productive sectors that include industry, agriculture and mining; infrastructure investment covering roads and housing, and foreign currency reserves and contingency fund, to support our domestic currency and macro-economic stability.
We would like to express our great appreciation to the IMF for this disbursement which shall be used transparently in line with the IMF guidance note.
</blockquote>
<h4>More: <a href="https://news.pindula.co.zw/">Pindula News</a></h4>

Mthuli, Mangudya Pledge To Use IMF Funds Transparently

Former Finance Minister Tendai Biti, who is the MDC Alliance vice president, has been criticised for his remarks on the International Monetary Fund (IMF)’s growth projections for Zimbabwe’s economy.
Biti had described the IMF as a naïve and dishonest institution after it published a report forecasting a 7% growth in Zimbabwe’s economy.
One Dr Tawanda Zinyama told ZBC News that it is very unpatriotic for Biti to speak badly about IMF findings which even an average man can simply notice. Said Zinyama:
<blockquote>I am not surprised at all with Biti’s utterances. The utterances are a classic example of unpatriotism. How can a Zimbabwean wish ill health for his motherland?
President Emmerson Mnangagwa team must fast-track the Patriotic Bill proceedings in Parliament to deal with this cancer in the opposition once and for all.
The IMF predictions have the legitimacy to government capacity and political will to bring about socio-economic transformation in Zimbabwe.</blockquote>
Collen Mharadzano opined that Biti’s utterances prove that the opposition party is not happy with Zimbabwe’s economic rebound, adding that his reaction to IMF findings spells doom for the MDC Alliance. He said:
<blockquote>Isolated criticism of IMF in Zimbabwe exposes the real intention of those who have always masquerade as champions of democracy.
Yet we all know that they have been Trojan Horses for white imperial capital. Their agenda is to inflict unbearable suffering amongst the populace hoping for a regime change someday.
It is crystal clear that the second republic under the able stewardship of President Emmerson Mnangagwa has stabilised and positioned the economy in the much-awaited growth mode.
So statistics depicting a modest growth for the economy by the IMF team in Zimbabwe is indeed spot on.
For any analyst, more so a Zimbabwean to project or wish doom for the economy and its people it’s outright fallacy.</blockquote>
Speaking during a recent policy dialogue organised by SAPES to discuss the recent IMF and World bank reports, Biti argued that this was not the first time the IMF has exhibited naivety when dealing with Zimbabwe.
IMF has projected a six per cent growth for Zimbabwe this year on the back of a bumper harvest and strong economic policies that have supposedly stabilised the economy.
<h4>More: <a href="https://www.zbcnews.co.zw/biti-imf-utterances-under-scrutiny/">ZBC News</a></h4>

Former Finance Minister, Tendai Biti, Criticised For IMF Remarks

The International Monetary Fund (IMF) has projected a 6% growth for Zimbabwe’s economy this year on higher farm output and a recovery in energy, manufacturing and construction.
The IMF’s latest forecast, released on Wednesday, is an upgrade on its earlier 2021 projection of 3.1% but is still lower than the government’s more ambitious 7.4%.
The IMF previously estimated that Zimbabwe’s economy had shrunk by 8% last year. Now it says the economy contracted by 4%.
In a statement that followed a virtual staff visit to Zimbabwe from June 1-15, the IMF said:
<blockquote>However, an economic recovery is underway in 2021, with real GDP expected to grow by about 6%, reflecting a bumper agricultural output, increased energy production, and the resumption of greater manufacturing and construction activities.
… Uncertainty remains high, however, and the outlook will depend on the pandemic’s evolution, the pace of vaccination and implementation of sustainable policies.</blockquote>
The IMF said while Zimbabwean authorities have taken commendable measures to stabilise the local currency, more extensive reforms are needed. The IMF said:
<blockquote>The IMF mission notes the authorities’ efforts to stabilise the local currency and lower inflation.
In this regard, contained budget deficits and reserve money growth, as well as the introduction of a foreign exchange auction system, are policy measures in the right direction.
… the mission highlighted that structural reforms aimed at improving the business climate and reducing governance vulnerabilities are essential for ensuring sustained and inclusive growth.</blockquote>
The IMF again said while Zimbabwe has cleared its arrears with the Fund, there will be no fresh credit until it clears its debts with other major lenders.
During the virtual visit, the IMF delegation met Finance Minister Mthuli Ncube, Reserve Bank of Zimbabwe Governor John Mangudya, private companies and donor agencies.
<h4>More: <a href="https://newzwire.live/imf-zimbabwe-economy-will-grow-6-in-2021-but-more-reforms-needed/" rel="noopener" target="_blank">newZWire</a></h4>

Zimbabwe Economy Will Grow 6% In 2021 - IMF

The International Monetary Fund (IMF) has said unsustainable debt is blocking the Breton Woods institution from financially assisting Zimbabwe.
IMF Director of the Communications Department Gerry Rice made the remarks on Friday adding that the international financial institution was aware of the deteriorating economic and social situation in Zimbabwe, which has been exacerbated by the Covid-19 pandemic. Said Rice:
<div class="bb_iawr" id="bb-iawr-newzimbabwe_com_instream-1617036844607818">
<div class="bb-media bb_wrapper bb-muted bb-state-loading bb-pendingplay bb-phase-pre bb-mode-commercial" data-autoplaynextremainingtime="0" data-currenttime="0" data-duration="157" data-isready="true" data-sid="Hn2aPuWzQ0qY" id="bb-wr-newzimbabwe_com_instream-1617036844607818">
<blockquote>
<div class="bb-item-prop">_We are precluded from providing financial support at this point, due to unsustainable debt and official external arrears at the situation… the Fund continues to provide policy advice and capacity development to Zimbabwe._</div>
</blockquote>
</div>
</div>
Zimbabwe cleared its 15-year debt arrears to the IMF amounting to about 108 million U.S. dollars in 2016.
However, the IMF insisted that the Southern African country is not eligible to receive new loans until it clears debt with other international financial institutions and bilateral creditors and also implements a strong reform agenda.
According to Finance Minister Mthuli Ncube, Zimbabwe’s total guaranteed external debt stood at about US$8.43 billion dollars at end of December 2020.

<ul>
<li class="entry-title"><a href="https://news.pindula.co.zw/2021/01/17/zimbabwe-loses-rights-to-vote-at-the-un-general-assembly-due-to-debts/">Zimbabwe Loses Rights To Vote At The UN General Assembly Due To Debts</a></li>
<li class="entry-title"><a href="https://news.pindula.co.zw/2020/11/13/world-bank-commends-zim-for-transparency-on-debt-reporting/">World Bank Commends Zim For Transparency On Debt Reporting</a></li>
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<li class="entry-title"><a href="https://news.pindula.co.zw/2020/10/30/full-text-we-are-not-paying-noics-debt-to-sakunda-rbz/">FULL TEXT: We Are Not Paying NOIC’s Debt To Sakunda – RBZ</a></li>
<li class="entry-title"><a href="https://news.pindula.co.zw/2020/10/19/zimbabwe-to-remain-in-debt-recent-report/">Zimbabwe To Remain In Debt – Recent Report -2020</a></li>
<li class="entry-title"><a href="https://news.pindula.co.zw/2020/07/24/magaisa-revisits-zamco-how-zimbabwean-taxpayers-paid-off-the-debts-of-the-elite-full-thread/">Magaisa Revisits ZAMCO, How Zimbabwean Taxpayers Paid Off The Debts Of The Elite {Full Thread}</a></li>
<li class="entry-title"><a href="https://news.pindula.co.zw/2020/07/20/zimpf-fires-its-vice-president-over-rbz-debt/">ZimPF Fires Its Vice President Over RBZ Debt</a></li>
<li class="entry-title"><a href="https://news.pindula.co.zw/2020/07/19/even-zimbabwe-assumed-rhodesias-debt-this-is-just-national-debt-no-beneficiary-refused-to-pay-gono-says-magaisas-allegations-are-defamatory/">Even Zimbabwe Assumed Rhodesia’s Debt, This Is Just National Debt, No Beneficiary Refused To Pay – Gono Says Magaisa’s Allegations Are Defamatory</a></li>
<li class="entry-title"><a href="https://news.pindula.co.zw/2020/07/18/its-immoral-and-unjust-magaisa-speaks-on-govt-assuming-debts-of-financially-sound-individuals/">“It’s Immoral And Unjust,” Magaisa Speaks On “Govt Assuming Debts Of Financially-Sound Individuals”</a></li>
<li class="entry-title"><a href="https://news.pindula.co.zw/2020/07/18/ezekiel-guti-nehemiah-mutendi-among-the-clerics-who-benefited-from-the-rbz-mechanisation-scheme-and-never-repaid-their-debts-magaisa/">Ezekiel Guti, Nehemiah Mutendi Among The Clerics Who Benefited From The RBZ Mechanisation Scheme And Never Repaid Their Debts – Magaisa</a></li>
<li class="entry-title"><a href="https://news.pindula.co.zw/2020/05/02/finance-minister-makes-it-clear-its-external-debt-not-sanctions/">Finance Minister Makes It Clear It’s “External Debt, Not Sanctions,”</a></li>
</ul>
More: <a href="https://news.pindula.co.zw/">Pindula News</a>; <a href="https://www.newzimbabwe.com/no-financial-support-for-zim-as-imf-conducts-staff-mission/">NewZimbabwe</a>

Unsustainable Debt Blocking IMF From Financially Assisting Zimbabwe

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:
<blockquote>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.</blockquote>
Ncube highlighted some of the economic reforms he said Harare will implement in order to unlock funding. He wrote:
<blockquote>Economic Reforms</blockquote>
<ul>
<li>
<blockquote>Adopt an exchange rate regime that is consistent with macroeconomic fundamentals and is market-determined.</blockquote>
</li>
<li>
<blockquote>Adopt a foreign exchange buy and sell regime that is transparent, market-driven, and verifiable.</blockquote>
</li>
<li>
<blockquote>Eliminate discretion in the allocation of foreign exchange by selling at the highest public bid rate.</blockquote>
</li>
<li>
<blockquote>Eliminate all Quasi Fiscal Operations of the Reserve Bank of Zimbabwe (RBZ).</blockquote>
</li>
<li>
<blockquote>Eliminate all of RBZ’s direct lending schemes.</blockquote>
</li>
<li>
<blockquote>Include all subsidies in the Budget to ensure transparency.</blockquote>
</li>
<li>
<blockquote>Contain money supply growth to levels commensurate with the stabilization of the exchange rate and reduction of inflation.</blockquote>
</li>
<li>
<blockquote>Table a mild-term 2020 Budget to Parliament, which will reallocate expenditures to the social sectors, including spending requirements for the global pandemic;</blockquote>
</li>
<li>
<blockquote>Limit the fiscal costs of the financing of agriculture, ensure transparency, and resolve all the related governance issues;</blockquote>
</li>
<li>
<blockquote>Adopt and implement a plan to holistically address the Structural Impediments to sustained private sector-led economic growth and transformation.</blockquote>
</li>
</ul>

Broke Zimbabwean Govt Promises IMF That It Will Reform

The IMF has projected that the Zimbabwean economy will contract by 7.4% in 2020 due to the pandemic that has so far infected 23 people and killed 3 people in Zimbabwe, Newsday reports.
This was revealed in a report by the international money lender which further confirmed that 2020 will be a turbulent year for Zimbabwe because:
<blockquote>On trade, a sharp growth slowdown among key trading partners reduces external demand, while disruptions of supply chains lower the availability of imported goods, potentially adding inflation pressure.
In addition, the sharp tightening of global financial conditions reduces investment flows to the region and hampers its ability to finance spending needs to deal with the health crisis and support growth,” IMF said.
This may result in either a cut in government spending, a build-up in arrears, or an increase in government borrowing in local markets, with attendant consequences on domestic credit and growth</blockquote>
According to Zimtrade, almost all African countries might be affected economically by the pandemic that has hindered air travel and ships which are used to transport a lot of exports out of Africa and individual nations.
More: <a href="https://www.newsday.co.zw/2020/04/economy-to-contract-by-74-imf/">Newsday</a>

Zimbabwe's Economy To Contract By 7.4% - IMF

Zimbabwe reportedly owes other international money lenders like the World Bank, African Development, European Investment Bank and other bilateral creditors that is why it was left out of the IMF COVID-19 Debt relief, The Herald reports.
This was revealed by a source at the Zimbabwe IMF office on condition of anonymity who said Zimbabwe doesn’t qualify for such debt relief programs because of its other debts. The source further added:
<blockquote>This is as far as traditional channels are concerned. We are looking if there are other ways/other funds, but it’s not promising
Zimbabwe was being blocked at the bilateral level where Washington will not allow a restructuring of an unspecified debt owed by Zimbabwe.</blockquote>
Meanwhile, as confirmed by the <a href="https://news.pindula.co.zw/2020/04/15/its-not-political-we-dont-owe-the-imf-thats-why-they-didnt-get-the-imf-covid-19-debt-relief-mthuli-ncube/">Finance Minister Mthuli Ncube, Zimbabwe cleared its debt to the IMF</a> in October 2016.
More: <a href="https://www.herald.co.zw/why-zim-didnt-get-imf-covid-19-debt-relief/">The Herald </a>

Zimbabwe Owe Other International Lenders Thats Why It Was Left Out On The IMF COVID-19 Debt Relief - Report

The Finance Minister Mthuli Ncube has explained why Zimbabwe was left out in the IMF COVId-19 debt relief and said the relief was for countries that owe the IMF and Zimbabwe does not owe the IMF and wasn’t supposed to benefit, The Herald reports.
Speaking to the publication the fundi responded to the question why Zimbabwe was left out and said the decision was not political. Said Professor Ncube:
<blockquote>Zimbabwe does not owe money to the IMF as we paid off loans with the world body.The support was mainly for countries that owe the IMF and are receiving relief on payments to the body in order to support the Covid-19 response
It is nothing political, but just something technical emanating from the fact that we cleared what we owed to the IMF</blockquote>
However, a source from the IMF said Zimbabwe does not qualify because it owes the World Bank, The African Development, European Investment Bank and other bilateral creditors.
More: <a href="https://www.herald.co.zw/why-zim-didnt-get-imf-covid-19-debt-relief/">The Herald</a>

Its Not Political, We Dont Owe The IMF Thats Why They Didnt Get The IMF COVID-19 Debt Relief - Mthuli Ncube

Sources close to the negotiations between the IMF and the Zimbabwean government said a recent discovery of a secret money printing press by the government is threatening the global money lender’s efforts to help Zimbabwe, New Zimbabwe reports
Last week the IMF issued a statement that said:
<blockquote>Uneven implementation of reforms, notably delays and mis-steps in FX and monetary reforms, have failed to restore confidence in the new currency</blockquote>
The government is yet to comment on the allegations that its secretly printing money.
More: <a href="https://www.newzimbabwe.com/zimbabwes-secret-money-printing-threatens-imf-assistance/">New Zimbabwe </a>

Secret Money Printing Threatens IMF Assistance To Zimbabwe - Report

The Political Actors’ Dialogue <a href="https://www.pindula.co.zw/Political_Actors_Dialogue">(POLAD)</a> has resolved to engage the United Nations, the International Monetary Fund, The World Bank and the international community at large, to help them lobby for the removal of sanctions, the Herald reports.
According to the publication this was revealed by NPRC Chairman who reiterated that sanctions were a threat to human life and they should go since they have been opposed on Zimbabwe since almost decades ago.
POLAD is a dialogue initiative initiated by the President comprising of about 17 political parties that took part in 2018’s harmonised election.
More:<a href="https://www.herald.co.zw/just-in-polad-to-engage-un-on-sanctions/"> The Herald</a>

POLAD Resolves To Engage UN, IMF, World Bank And The International Community On Sanctions.

For the govt to curb inflation which is threatening to get out of hand, the country should have an independent central bank IMF’ country representative Patrick Imam said.
Mr Imam was speaking at a multi-stakeholder debt conference in Harare when he said:
<blockquote>I have said this earlier, Zimbabwe needs an independent central bank. The deeper question is: why is it all the Latin American countries and some African countries which have been through hyperinflation reformed their institutions?
The first thing you do after hyperinflation is to create an independent central bank. After the hyperinflationary period a decade ago Zimbabwe hasn’t been able to put the right institutions in place.Institutional reform will help in ensuring there is no repeat of history. <a href="https://www.pindula.co.zw/Reserve_Bank_of_Zimbabwe">RBZ</a> needs to be truly independent so as to make independent decisions</blockquote>
The IMF <a href="https://news.pindula.co.zw/2019/10/30/imf-concerned-by-the-govts-reforms-implementation-pace-report/">has been imploring the govt to implement reforms</a> so that the country’s debt may be restructured.
More: <a href="https://www.theindependent.co.zw/2019/11/01/zim-needs-an-independent-central-bank/">Zimbabwe Independent</a>

Zimbabwe Needs An Independent Central Bank To Avert Hyper Inflation Risk - IMF

The IMF has reportedly expressed concern over the pace the govt of Zimbabwe is implementing reforms in a bid to have the country’s debt restructured.
This was revealed by IMF representative in Zimbabwe, Patrick Imam, at a Public Debt Conference held by the African Forum and Network on Debt and Development (AFRODAD) in Harare when he said;
<blockquote>The perception they (IMF member countries) have is that Zimbabwe has started the economic reform path but has not sufficiently moved on political reforms. What this means is aligning laws to the Constitution.
As long as the political reforms don’t move at the same time with economic reforms we will not have the debt rescheduling. Therefore we will unfortunately have to be on our own until we move on both sides</blockquote>
The IMF this last month <a href="https://news.pindula.co.zw/2019/09/28/zimbabwes-annual-inflation-rate-soar-to-almost-300-in-august-imf/">published the inflation rate for Zimbabwe and said it stands at close to 300%</a>.
More: <a href="http://theanchor.co.zw/2019/10/30/imf-concerned-as-govt-drags-feet-on-political-reforms/">The Anchor</a>

IMF Concerned By The Govt's Reforms Implementation Pace - Report

On Thursday the International Moneraty Fund said Zimbabwe needed to intensify its efforts to reform the country’s economic and political fate and improve meaningfully on transparency. The warning according to VOA came on the same day as a report by the Financial Times said the government was warned against state payouts to local company Sakunda Holdings because they were undermining trust in the economy.
According to VOA:
<blockquote>A source with knowledge of the Sakunda transactions told Reuters the IMF had raised a red flag over the central bank’s preferential treatment of $366 million of Treasury bills issued to Sakunda in January.
Zimbabwe, which adopted the U.S. dollar as legal tender in 2009, launched a transitional currency in February and converted all its domestic foreign-currency debt to local currency at a ratio of 1:1. But Sakunda’s bills remained denominated in U.S. dollars, the source added.
Sakunda then redeemed $330 million of the bills in July and was paid more than 3 billion Zimbabwe dollars by the central bank, according to the source.</blockquote>
The IMF has this to say about the need to reform the economy when they visited Zimbabwe in September 2019:
<blockquote>Policy actions are urgently needed to tackle the root causes of economic instability and enable private-sector led growth,
The key challenge is to contain fiscal spending consistent with non-inflationary financing and tighten monetary policy to stabilise the exchange rate and start rebuilding confidence in the national currency.</blockquote>
More: <a href="https://www.voazimbabwe.com/a/zimbabwe-transparency-imf/5103349.html">VOA</a>

Zimbabwe Needs To Intensify Reform Efforts And Meaningfully Improve Transparency - IMF

<blockquote>The IMF mission had productive discussions with the Zimbabwean authorities related to the 2019 Article IV consultation and performance under the Staff Monitored Program.
In this context, the authorities have reiterated strong policy commitments to implement much-needed reforms to restore stability, strengthen social protection, meaningfully improve transparency, improve FX policies and the monetary policy framework, and lay the foundations for a sustainable job-creating growth path.
The authorities and staff both acknowledge the complex macroeconomic environment in which these reforms are being undertaken, with Zimbabwe facing the impact of a severe drought and its external arrears preventing access to traditional avenues of external financing.
Economic difficulties have continued throughout 2019, exacerbated by severe weather shocks. GDP growth in 2019 is expected to be steeply negative as the effects of drought on agricultural production and electricity generation, impact of cyclone Idai, and the significant fiscal consolidation to correct past excesses serve to drag on growth.
Social conditions have deteriorated sharply, with more than half of Zimbabwe’s population (8.5 million people) estimated by the UN to be food insecure in 2019/2020.
Weakening confidence, policy uncertainty, a continuation of FX market distortions, and a recent expansionary monetary stance has increased pressure on the exchange rate.
Since the February currency reform, the exchange rate has depreciated from USD 1:1 ZWL to USD 1:16.5 ZWL (as of September 23), fostering high inflation, which reached almost 300 per cent (year-over-year) in August.
Policy actions are urgently needed to tackle the root causes of economic instability and enable private-sector-led growth.
The key challenge is to contain fiscal spending consistent with non-inflationary financing and tighten monetary policy to stabilize the exchange rate and start rebuilding confidence in the national currency.
Risks to budget execution are high as demands for further public sector wage increases, quasi-fiscal activities of the RBZ that will need to be absorbed by the central government, and pressure to finance agriculture could push the deficit back into an unsustainable stance.
There is also a need to strengthen FX market operations and improve transparency on monetary statistics. These adjustment challenges are magnified by slow progress on international reengagement. Efforts will need to be intensified on both economic and political fronts to drive Zimbabwe forward.
The IMF staff and the authorities have agreed to maintain a close and continuous dialogue in the coming weeks on economic policies to restore economic stability while accommodating spending to alleviate food insecurity and protect vulnerable groups.
Our dialogue with the Zimbabwean authorities is anticipated to continue during the IMF and World Bank Annual Meetings, taking place October 14-20, 2019.
The team is grateful to the authorities for their frank and open discussions on economic policy options. The mission met with H.E. President E. Mnangagwa, Finance Minister M. Ncube, RBZ Governor J.P. Mangudya, other senior officials, members of Parliament, representatives of the private sector, civil society, and development partners.
The team wishes to thank the authorities and the staff of the MoFED and the RBZ for their warm hospitality and collaboration.</blockquote>
<h4>More: <a href="https://newzwire.live/zimbabwe-imf-3/" rel="noopener noreferrer" target="_blank">NewZWire</a></h4>

FULL TEXT: Latest IMF Statement On Zimbabwe After Review Of First SMP

Former Finance Minister, Tendai Biti has urged International Finance Institutions, particularly the International Monetary Fund (IMF) not to extend lines of credit to Zimbabwe until a transitional government is established.
The MDC vice president advised Western countries not be fooled by the Zimbabwean government’s cosmetic reforms that are divorced from the rule of law and adoption of democratic tenets.
Writing in the Foreign Policy magazine, Biti argued that Zimbabwe needs help from both international and regional partners to ward off economic collapse. He said:
<blockquote>To attract foreign investment, Zimbabwe needs to show that it respects the rule of law, including by strengthening property rights and guaranteeing that profits can be repatriated outside Zimbabwe.
The current government cannot be trusted to undertake such a programme.
That is because Zanu PF stands to lose from serious reforms since they would inevitably eliminate the party’s traditional sources of finance, patronage and control.
A transitional government arrangement, akin to the unity government of 2009–13, has to lead the reform effort.
To bring one about, the IMF and other major multilateral organisations should offer Zanu PF incentives to come to the negotiating table — not reward it prematurely as the IMF did with the staff-monitored programme.
Zimbabwe needs help from its international partners, as well as from neighbouring countries and regional blocs, to stave off total economic collapse.
First, however, it needs to get its politics right.</blockquote>
Meanwhile, regional organisation, the Southern African Development Community (SADC) has urged Western countries to remove sanctions they imposed on Zimbabwe.
They made the call during the recent SADC Summit held in the United Republic of Tanzania.
<h4>More: <a href="https://www.dailynews.co.zw/articles/2019/08/22/biti-piles-misery-on-ed" rel="noopener noreferrer" target="_blank">Daily News</a></h4>

Biti Calls For An Inclusive Government

The International Monetary Fund (IMF) said that state workers’ salaries should be raised but this should be done sustainably.
IMF’s resident representative to Zimbabwe, Patrick Imam noted that the government’s wage bill increased significantly between 2010 and 2016.
The unsustainable increase of the wage bill more than doubled from about 40 per cent to nearly 90 per cent of tax revenue. Said, Imam:
<blockquote>But unlike in other countries, the issue in Zimbabwe was not the public employment level, which was in line with peers, but rather the public sector wage premium, which was significantly above peers.</blockquote>
Imam said that civil servants’ salaries should increase going forward, and this should not be done through printing money. He added:
<blockquote>… going forward, civil servant wages will have to increase, as the Government already announced in its supplementary budget.
However, it must be financed sustainably. In the past years, wage increases were financed by printing money, which in the end was self-defeating as it eroded the purchasing power of the wage increase.
It is, therefore, important that wage increases be aligned with growth in tax revenues to ensure it does not create an unsustainable burden on the budget.</blockquote>
Meanwhile, reports indicate that the government will soon issue new notes and coins to replace the surrogate currency (bond note) that was introduced in 2016.
Minister of Finance, Mthuli Ncube told Bloomberg that the Zimbabwe dollar notes will trade at parity to the bond notes.
<h4>More: <a href="https://www.chronicle.co.zw/align-wage-increases-to-tax-revenues-growth-imf/" rel="noopener noreferrer" target="_blank">Chronicle</a></h4>

"Civil Servants' Salaries Should Be Raised Sustainably", IMF

The International Monetary Fund’s (IMF) resident representative in Zimbabwe, Patrick Imam warned the government against raising salaries for state workers.
Inflation has decimated the value of the local currency, the RTGS Dollar introduced in February this year. As a result, spending power has been reduced to a 10th of what it was as recently as February. Said, Imam:
<blockquote>The government wage bill is now on a sustainable footing. Looking ahead, it is crucial that public wage growth is aligned with economic growth and government revenue.</blockquote>
Reports indicate that civil servants’ salaries gobble 40% of the government’s tax revenue, which is a significant improvement from more than 90% last year.
Imam’s prescription is however at odds with Finance Minister Mthuli Ncube who claims to be a “champion of wage adjustment”. In an interview with Bloomberg, Ncube said:
<blockquote>What people are feeling is really wage compression. Prices adjusted instantly to the exchange rate, but wages have been too slow to catch up with the adjustment. The issue is about wage adjustment and I’m a big champion of wage adjustment.</blockquote>
Imam revealed that the IMF Staff-monitored programme for Zimbabwe is a precursor to getting the debt relief that’s needed to restore an economy that’s been stagnant for two decades. Said, Imam:
<blockquote>The staff monitored program is also intended to assist in resolving the long-standing arrears to external creditors and facilitate re-engagement with the international community.
Given the recent history of Zimbabwe, in particular, the fact that the country has arrears to other international organizations, as well as bilateral arrears, the fund is not yet in a position to financially support the country.</blockquote>
<h4>More: <a href="https://www.bnnbloomberg.ca/imf-warns-zimbabwe-against-pay-boost-as-living-standards-crash-1.1303398" rel="noopener noreferrer" target="_blank">Bloomberg</a></h4>

IMF Advises Govt NOT To Raise Civil Servants' Salaries

Spokesperson of the National Patriotic Front (NPF), Jealousy Mawarire sensationally claimed that the decision to reintroduce the Zimbabwe Dollar was not made by the Cabinet or Finance and Development Minister Mthuli Ncube.
The Robert Mugabe-linked party spokesperson said that the decision was made by the Presidential Advisory Council (PAC) on Sunday 23 June. Said Mawarire:
<blockquote>Am reliably informed the decision to reintroduce Zim$ was pressured on ED’s junta govt, thru PAC, by the IMF team which came in to assess the Staff Monitored Program. The team wasn’t impressed by the drastic rate at which RTGS$ was losing value both on parallel &amp; interbank markets.
Attempts at exchange rate stabilisation were then promulgated by PAC, based on, inter alia (a)Intro of Z$ (b) Dialogue involving @nelsonchamisa (c)Injection of US$600m to enable RBZ &amp; banks to partly settle historical (Pre Feb 22) invoices at 1:1. The invoices amount to US1.2bn.
The decision to reintroduce the Zim$ was then made by PAC on Sunday 23 June 2019 without Mthuli Ncube, cabinet or parliament approval. PAC then recommended that in order for the Zim$ reintroduction to work, President Mnangagwa should, immediately, dialogue with @nelsonchamisa.
It comes as no surprise that the most sycophantic social media supporters of the Zim$ reintroduction are Trevor Ncube, Shingi Munyeza &amp; Busisa Moyo, PAC members active on Twitter. Trevor Ncube also used his NewsDay Zimbabwe to announce that ED was prepared to meet Chamisa.
The envisaged dialogue between President Mnangagwa &amp; Nelson Chamisa hasn’t been, curiously, ridiculed by people like Trevor Ncube despite his very public disdain 4 the youthful MDC leader. Instead, Ncube has used his papers to subtly advocate 4 the dialogue, a PAC obligation he has to execute.</blockquote>

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