HARARE – Full implementation of the International Monetary Fund (IMF)’s Staff Monitored Programme (SMP) in Zimbabwe will help reduce the country’s indebtedness, the African Development Bank (AfDB) says.
The regional institution said, in its September 2013 monthly economic review, that adoption of the SMP will also unlock new inflows into the investment-starved country and also provide direction to execute macro-economic policy.
Economic analysts say Zimbabwe needs to urgently deal with its external debt which has ballooned to a staggering $11 billion.
Under the SMP, Zimbabwe needs to increase financial consolidation, strengthen public financial management, improve transparency in revenue collection in the mining sector and reform tax policy and administration.
This comes as the move by IMF to reengage Zimbabwe in June this year marked a major step towards the country normalising relations with the international lender, which suspended its voting rights in 2003.
While its voting rights were restored in 2010, Zimbabwe has not been able to borrow from international lenders since 1999, when it started defaulting on its debt.
According to a recent report by deputy Finance minister Samuel Undenge, as at December 31, 2012, the preliminary figures of the public and publicly guaranteed external debt outstanding (exclusive of reserve bank and private sector debt) stood at six billion dollars, 62 percent of GDP.
The stock of accumulated arrears accounted for $4,7 billion (seven percent) of total debt stock.