Zimbabwe is facing deep macroeconomic imbalances, with large fiscal deficits, significant distortions in foreign exchange and other markets, which severely hamper the functioning of the economy.
Thursday 11, April 2019 BY KUDAKWASHE MUZORIWA
Zimbabwe has reached an agreement with the International Monetary Fund (IMF) on a programme of economic policies and structural reforms that could pave the way for the Southern Africa nation to re-engaging with international financial institutions.
Gene Leon, the leader of the IMF team, said, “The programme, which will be monitored on a quarterly basis seeks to implement a coherent set of policies that can facilitate a return to macroeconomic stability, successful implementation will assist in building a track record and facilitate Zimbabwe’s re-engagement with the international community.”
Additionally, Zimbabwe is also facing the challenge of responding to the adverse effects on agriculture and food security of the el Nino-related drought as well as the devastation from Cyclone Idai.
The agreement with the IMF is focusing on eliminating the double-digit fiscal deficit and the adoption of reforms to allow market forces to drive the functioning of foreign exchange and other financial markets.
“The agreed policies, both macroeconomic and structural, can be expected to remove critical distortions that have held back private sector growth and to improve governance,” added Leon.
Zimbabwe has not been able to borrow from international lenders since 1999 when it started defaulting on its debt, it has arrears of around $2.2 billion with the World Bank, the African Development Bank and European Investment Bank.