Statement of the IMF Mission to ZimbabwePress Release No. 10/240
June 14, 2010
An IMF mission visited Harare during June 2-10, 2010 to review recent economic developments and assist the government in the preparation of the mid-year budget statement. The staff team met with Minister of Finance Biti, Minister of Economic Development Mangoma, Minister of Youth and Indigenization Kasukuwere, Minister of Mines and Mining Development Mpofu, Reserve Bank of Zimbabwe (RBZ) Governor Gono, and other senior government officials, as well as representatives of the business and diplomatic communities. The mission would like to thank the authorities for excellent cooperation and warm hospitality.
At the end of the visit, Vitaliy Kramarenko, mission chief, made the following statement:
“Upside risks to the short-term growth outlook are materializing as the economy is benefitting from a significant increase in export prices and a good agricultural season. In this context, discussions focused on policies that would help leverage the positive effects of the favorable exogenous shocks to solidify the economic recovery and reduce significant external and financial vulnerabilities. Considering these vulnerabilities and fiscal sustainability concerns, the cash budget deficit would need to be limited to about 2.5 percent of GDP in 2010. The authorities are advised to complete the on-going government payroll audit and start eliminating ghost workers, while attaching greater priority to social and development programs. It is also important to step up efforts in containing risks in the banking system, and to improve the business climate, in particular with respect to property rights. Against the background of a recent pickup in inflation and rising concerns about competitiveness, wage restraint is needed in both the private and public sectors. The new RBZ Board’s initial discussions on the refocusing and restructuring of the institution are welcome, and IMF staff stand ready to provide technical assistance in these areas.
“IMF staff will continue to be engaged with the Zimbabwe authorities on key economic policy issues and to provide targeted technical assistance. Improving the timeliness and quality of data reporting and making further progress in economic policies would help to move toward a staff monitored program, which is the stepping stone to an IMF financial arrangement and debt relief.”