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Harare - The International Monetary Fund (IMF) on Wednesday said Zimbabwe has met its commitments under the Staff Monitored Program (SMP) that ended at end-December 2015, and is now on course to receive funding in support of its development agenda.
“The authorities have met their commitments under the Staff Monitored Program (SMP) that ended at end-December 2015, despite economic and financial difficulties,” said the IMF in a press release.
“Further progress on these fronts, as well as on clearance of external arrears, will pave the way for full re-engagement with the international community, allowing Zimbabwe to regain access to external financing, particularly from the Fund, in support of its development agenda,” said the IMF.
“Achieving a sustainable fiscal position requires a significant reduction in the wage bill, while rebalancing the budget toward much-needed infrastructure investment and social outlays to stimulate growth,” said the IMF adding that given the relatively high tax-to-GDP ratio, it is “appropriate to focus efforts on base-broadening, increasing non-tax revenue from mineral resources, improving the efficiency of VAT collections, and enhancing tax administration.”
“Further steps are needed to accelerate the reform of state-owned enterprises, strengthen public financial management, and enhance transparency in the mining sector.”
The directors also commented on the issue of indigenisation saying there is need “to implement the indigenization policy in a business-friendly and transparent manner, and to resolve outstanding land issues swiftly.”
The IMF directors also noted that although adverse weather conditions and lower commodity prices took a heavy toll on economic activity and social well-being, it was still important for Zimbabwe to maintain fiscal prudence and press ahead with ambitious structural reforms to address impediments to investment.
It added that the reforms will help “foster private sector-led growth, and reduce poverty, making the best use of the Fund’s targeted technical assistance.
The SMP focused on implementing a limited number of key reforms to show that Zimbabwe has the capacity to implement the kind of reforms that would be required for a Fund-supported program.
