Zim in deep crisis: IMF

©️ ZIMBABWE is facing a serious humanitarian crisis and needs urgent help as the outbreak of coronavirus (Covid-19) will bring the southern African country to its knees, the International Monetary Fund (IMF) has said.
This comes after Zimbabwe has so far recorded nine confirmed cases of coronavirus and one death, while approximately 8 million people face starvation in the face of drought and natural disasters.
In its article IV consultation report, the IMF said the country’s economic instability remains a challenge.
“While highly uncertain at this stage, it is clear that Covid-19 will adversely impact the economic outlook for Zimbabwe and require additional health-related spending and international support. Covid-19 will make it even harder to balance the policies needed to restore macroeconomic stability with those to address urgent social needs.


“Zimbabwe is experiencing an economic and humanitarian crisis. Macroeconomic stability remains a challenge: the economy contracted sharply in 2019, amplified by climate shocks that have crippled agriculture and electricity generation; the newly-introduced ZWL$ has lost most of its value; inflation is very high; and international reserves are very low.


“The climate shocks have magnified the social impacts of the fiscal retrenchment, leaving more than half of the population food insecure. With another poor harvest expected, growth in 2020 is projected at near zero, with food shortages continuing,” the statement said.
IMF said the economic crisis is being caused by policy inconsistences.
“Executive directors noted with concern that Zimbabwe is facing an economic and humanitarian crisis exacerbated by policy missteps and climate‑related shocks. These would require difficult policy choices from the authorities and support from the international community.
“Directors urged the authorities to make a concerted effort to ensure economic and social stability through the adoption of coordinated fiscal, monetary and foreign exchange policies, alongside with efforts to address food insecurity and serious governance challenges. They emphasised the importance of reengagement with the international community to support efforts to achieve economic sustainability and address the humanitarian crisis.”
IMF said there is need to address governance and corruption challenges, entrenched vested interests, and enforcement of the rule of law to improve the business climate and support private sector-led inclusive growth.
“Such efforts would be instrumental to advance reengagement efforts with the international community and mobilise the needed support.
“They noted with regret that the Staff‑Monitored Programme was off‑track and underscored the importance of continued engagement between the Fund and the authorities, including through technical assistance, policy advice and other innovative ways, to help immediately stabilise the economy and address the humanitarian crisis.”
They added that Zimbabwe must reduce its expenditure.
“Notwithstanding efforts in 2019 to tighten the fiscal stance and contain quasi‑fiscal operations by the central bank, directors noted that pervasive deficits remain and could be exacerbated by the need to respond to the humanitarian crisis.
“Directors called for nonessential spending cuts, including decisive reforms to agricultural support programmes, to allow for social spending needs. They underscored the importance of public financial management and enhanced domestic revenue mobilisation efforts.
“Directors stressed that eliminating deficit monetisation would not only be crucial for fiscal sustainability, but it would also serve as a precondition for the stabilisation of hyper‑inflation and the preservation of the external value of the currency.”




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