THE International Monetary Fund (IMF) has warned the government on the command agriculture programme, saying excessive public spending, if continued, could exacerbate cash scarcity, further jeopardise the financial sector and ultimately fuel inflation.
BY TARISAI MANDIZHA
Speaking at a media briefing last week, IMF deputy director of strategy, policy and review, Alfred Kammer, responded to a question on what funding model could return Zimbabwe to being the breadbasket of the region.
“In terms of the funding model that you asked about and the breadbasket concept, we focus on the fiscal implications of the agriculture programme in Zimbabwe,” he said.
“Our analysis suggests that the current design of the programme creates significant fiscal risks and overall effectiveness could be improved by ensuring that the beneficiaries are those most in need.”
Kammer said Zimbabwe would record economic growth this year due to improved rain, but warned this was not sustainable.
“The main finding regarding Zimbabwe is that growth in 2017 will be boosted by the bumper harvest due to exceptional rainfall,” he said.
“The challenge really is to sustain growth in Zimbabwe. This will require timely action to reduce the deficit to a sustainable level and reforms to attract investment.
“Excessive government spending, if continued, could exacerbate a cash scarcity, further jeopardise the external and financial sectors, and ultimately, fuel inflation in Zimbabwe.”
This came as Finance minister Patrick Chinamasa in his recent 2016 budget review and 2017 economic outlook said part of the major driver behind 2016’s budget overrun of $902,2 million was expenditure interventions in support of the recovery of agriculture.
Kammer said without adjustment reform and re-engagement, Zimbabwe would have difficulty in addressing its structural issues.
The IMF last week critiqued the country’s support programmes for agriculture, calling for a cost-effective and well-targeted approach.
During consultations between the IMF and Zimbabwean authorities, the international body questioned the design and financing of the command agriculture programme, as the commitment to buy large quantities of grain at above-market prices is not cost-efficient.