Zim economy will grow bigger than we earlier projected – IMF

by | Jun 17, 2021 | Business | 0 comments


Nevanji Munyaradzi Chiondegwa

In a rare show of approval of Zimbabwean policies by The Bretton Woods Institutions, the IMF has predicted a double increase in the country`s economic growth, from three percent earlier predicted six percent, only 1.5 percentage points lower than the official Ministry of Finance and Economic Development of 7.5 percent.

This after the World Bank country report which was also positive despite the Covid-19 pandemic, the sanctions on Zimbabwe and the natural disasters including Cyclone Idai and prolonged drought in the Southern African nation.
The growth is underpinned against the successful Agricultural output, increased energy production, greater manufacturing and construction projects and implementation of sustainable policies.

The predictions and positive review follows a recent virtual staff visit by The IMF team to Zimbabwe that started on June 1 to June 15.
The statement from the team led by Dhaneshwar Ghura read, “Zimbabwe has shown resilience in the face of the COVID-19 pandemic and other exogenous shocks. The pandemic, on top of Cyclone Idai in 2019, a protracted drought, and weak policy buffers, has taken a severe toll on the economic and humanitarian situation. Despite the authorities’ timely actions to support the most vulnerable groups and businesses during the pandemic, real GDP contracted by four percent in 2020, after a six percent decline in 2019. However, an economic recovery is under way in 2021, with real GDP expected to grow by about six percent, 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”.

The monetary and fiscal policies also came in for much praise with the currency auction by the Reserve Bank of Zimbabwe mentioned as a policy in the right direction.
The IMF staff monitoring team said, “The IMF mission notes the authorities’ efforts to stabilize 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 IMF team also urged the measures outlined in the National Development Strategy 1, the successor of the TSP to be operationalized.
They said, “Further efforts are needed to solidify the stabilization trends and accelerate reforms. The near-term macroeconomic imperative is to improve the coordination among fiscal, foreign exchange and monetary policies, while addressing COVID-19 related economic and humanitarian challenges. In line with the last Article IV consultation, the mission highlighted that structural reforms aimed at improving the business climate and reducing governance vulnerabilities are essential for ensuring sustained and inclusive growth. To this end, the authorities’ strategy and policies as embodied in their National Development Strategy need to be fully operationalized and implemented. Durable macroeconomic stability and structural reforms would bode well for the recovery and Zimbabwe’s development objectives.”

However, despite the praises and admitting that Zimbabwe has cleared its arrears with the fund, the IMF says it can not provide financial support due to unsustainable debt and official external arrears.
The IMF however provides extensive technical assistance in the areas of economic governance and financial sector reforms, as well as macroeconomic statistics.

The IMF staff held meetings with Minister Mthuli Ncube, Reserve Bank of Zimbabwe Governor John Mangudya, other senior government and RBZ officials, representatives of the private sector and Zimbabwe’s development partners.
“The IMF staff wishes to express its gratitude to the Zimbabwean authorities and stakeholders for the constructive and open spirit in which all discussions were held.”