AN International Monetary Fund (IMF) official has said Zimbabwe’s debt situation will be tabled before creditors at a side meeting of the IMF/World Bank annual meetings to be held in Peru from Friday.
Christian Beddies, IMF resident representative in Zimbabwe, told the Financial Gazette’s Companies & Markets: “All of Zimbabwe’s creditors, multilateral and bilateral, have been invited to the (side) meeting”.
He explained: “As has already been announced, there will be a meeting on the sidelines of the upcoming annual meetings of the International Monetary Fund and the World Bank Group in Lima, Peru in October. At that meeting, the Zimbabwean authorities will present options on arrears clearance to the IFIs (AfDB, IMF and World Bank) to stakeholders, i.e. its creditors as well as broad reform areas they intend to tackle over the medium term. Thus, the meeting is also an opportunity for the authorities to highlight their reform agenda and progress thus far,” he said.
Asked if this had ever happened in the history of the Bretton Woods institutions that a meeting is separately organised to deal with problems affecting a particular country, Beddies replied: “The annual meetings of the International Monetary Fund and the World Bank Group each year bring together about 13 000 people comprising of central bankers, ministers of finance and development, private sector executives, civil society, media and academics to discuss issues of global concern, including the world economic outlook, global financial stability, poverty eradication, jobs and growth, economic development, and aid effectiveness.
“The meetings also offer an opportunity for member states to interact with each other and share views in a global setting. So to answer the question, yes, given that the annual meetings bring together so many stakeholders from across the world, it provides a unique opportunity for any country to organise a side meeting if it considers it a useful vehicle to address pressing issues pertaining to the country.”
But there were suggestions from the donor community that Zimbabwe had been granted an “unprecedented platform” to interact with its creditors to convince them to give the country relief in terms of clearance of its international debt arrears and mobilisation of new funding to revive the collapsing economy.
Already, there are sharp differences within government on the issue, with some ruling party politicians baying for Finance Minister Patrick Chinamasa’s blood for proposing radical reforms they suspect could result in ZANU-PF losing its grip to power.
Some of the proposals are likely to include a re-look at the land reform programme, with the European Union having already signalled that it expects Zimbabwe’s presentation to deal with the issue of compensation for expropriated white-owned farms.
ZANU-PF politicians accuse Chinamasa of accepting IMF reforms which they allege are out of sync with the party’s empowerment vision, which has ironically impoverished millions of Zimbabweans and triggered an unprecedented economic meltdown.
Zimbabwe is currently implementing an IMF Staff-Monitored Program (SMP), an informal agreement between country authorities and IMF staff to monitor the implementation of agreed economic programmes.
In a statement on Friday, the IMF said Zimbabwe’s administrators “continue to see the SMP as a crucial tool in building a strong track record toward normalising their relationship with creditors, mobilising development partners’ support, and for supporting macroeconomic policies and laying the foundation for addressing Zimbabwe’s deep seated structural issues”.
The statement highlighted the following:
“Zimbabwe’s economic and financial conditions remain difficult. Growth has slowed, unemployment is rising and economic activity is increasingly shifting to the informal sector. The external position remains precarious. In light of their arrears to creditors, low commodity prices, and an appreciating U.S. dollar, external inflows remain highly constrained, the levels of international reserves very low, and the country is in debt distress. Risks to the outlook stem mainly from fiscal challenges, weak global commodity prices, adverse weather conditions, and policy implementation in a difficult political environment. However, further advancing the ongoing reforms and re-engaging with the international community could reopen Zimbabwe’s access to financial support and lift the economic outlook. The Zimbabwean authorities remain committed to implementing sound macroeconomic and structural policies.
“Despite increasing economic and financial difficulties, the Zimbabwean authorities have demonstrated strong commitment to the programme by taking important steps to advance their macroeconomic and structural reforms. They have made significant progress in implementing their reform agenda, particularly in financial sector and labour-market reforms. In addition, they are starting to take steps to rationalise public expenditure and reduce public sector employment costs. The policy reform agenda for the remainder of the SMP consists of: (a) mitigating the impact of this year’s adverse shocks on the external position and growth; (b) improving the investment climate; (c) restoring confidence in the financial sector; and (d) garnering support for a strategy to clear arrears to the international financial institutions (IFIs).
“The authorities have intensified their re-engagement with the international community, with the immediate objective of resolving arrears with the IFIs. They have developed a strategy for clearing Zimbabwe’s external arrears to IFIs, for which they will seek the support of creditors and development partners at a meeting on the sidelines of the October 2015 Annual Meetings of the IMF and World Bank in Lima, Peru.
“Going forward, strong support at the Lima meeting, a successful completion of the SMP and a deepening of ongoing reforms would set the stage for advancing the re-engagement process with the IFIs and bilateral creditors.
“IMF staff will continue to support Zimbabwe’s economic reforms and their pursuit towards arrears clearance and debt relief. Staff will remain engaged with the authorities to monitor progress in the implementation of their economic programme, and will continue providing targeted technical assistance in order to support Zimbabwe’s capacity-building efforts and its adjustment and ongoing reform process.