BUSINESS REPORTER
The International Monetary Fund (IMF) says the use of special drawing rights (SDRs) by Zimbabwe in social, productive and infrastructure sectors should not be substitute for reforms required to lock in economic stabilisation gains.
In August, Zimbabwe got nearly US$1bn from the global lender as part of the US$650bn facility given to member countries. The central bank recently said it would use part of the resources to stabilise the local currency.
But in a report after the annual Article IV Consultations held virtually, IMF Mission Chief for Zimbabwe Dhaneshwar Ghura said reforms should lay the path for Zimbabwe’s growth.
“The mission notes the authorities’ plans to use the recent SDR allocation to support spending in social, productive, and infrastructure sectors, as well as building reserve buffers. In this context, the use of the SDR allocation should not substitute for critical reforms, be spent on priority areas within a medium-term plan, and follow good governance and transparency practices,” Ghura said.
He said the near-term macroeconomic imperative is to continue with the close coordination among fiscal, exchange rate, and monetary policies.
Key priorities relate to allowing greater official exchange rate flexibility and tackling forex market distortions, accompanied by an appropriate monetary stance; creating fiscal space for critical spending while containing fiscal deficits; implementing growth-enhancing structural and governance reforms; and continuing to enhance data transparency.
“These reforms are paramount for improving the business climate and reducing governance vulnerabilities, and thus to foster higher sustained and inclusive growth,” it said.
IMF said Zimbabwe’s strategies espoused in their 2021-25 National Development Strategy 1 are appropriate and need to be fully operationalised and implemented.
Durable macroeconomic stability and structural reforms would support the recovery and Zimbabwe’s development objectives, it said.
The virtual meetings were held from October 25 to November 16.
