In May last year, then IMF managing director Christine Lagarde approved a 10 months Staff Monitored Programme (SMP) intended to assist Zimbabwe in building a track record of implementation of a coherent set of economic and social policies that can facilitate a return to macroeconomic stability and assist in reengagement with the international community.
The global lender recently said the SMP was off-track due to mixed policy implementation adding that delays and missteps in forex and monetary reforms have failed to restore confidence in the new currency.
Finance and Economic Development minister Mthuli Ncube said last week that a second phase of the SMP is in the offing to monitor Zimbabwe on the targets it would have set.
“Having completed the Article IV report, they are coming back next month for recalibration and continuation of the second phase of the Staff Monitored Programme.
They are monitoring us on the targets that we set for ourselves in the first place,” Ncube said.
“This is not an imposition by IMF on anyone. We have these targets in our budget; we have monetary targets, TSP targets.
So, we will stick to those targets ourselves, with or without the IMF.
The IMF is there to tell others that we are sticking to our targets.” The global lender is considered as the international “Commissioner of Oaths” which gives signal to other lenders on a country. Zimbabwe requires cheap lines of credit to help stave off a debilitating foreign currency crisis which stymies growth.
As at the end of September 30, 2019, Zimbabwe’s external debt stood at US$8bn billion which has prevented it from accessing new financing from the International Financial Institutions, traditional bilateral and commercial creditors.
In its report after the conclusion of the Article IV consultations, IMF said the Zimbabwean government has yet to define the modalities and financing to clear arrears to the World Bank and other multilateral institutions, and to undertake reforms that would facilitate resolution of arrears with bilateral creditors.
IMF said Zimbabwe should to give impetus to reengagement efforts and debt management and transparency.
The global lender’s directors cautioned against continued recourse to collateralised external borrowing on commercial terms as this may potentially “complicate any future arrears clearance operation”.
Analysts say a resolution of the arrears problem will unlock cheap lines of credit required to reboot the economy.
Zimbabwe has in the past come up with lofty plans to resolve the debt crisis, but failed to implement the roadmap.
Zimbabwe’s overdue obligation to international institutions is coming at a cost.
Business Times reported last week that Zimbabwe cannot tap into the US$50bn IMF facility which acts as a shock absorber against against the effects of the coronavirus for low income and emerging market countries.
The US$50bn Catastrophic Containment and Relief Trust facility is funded by grants and Zimbabwe does not qualify as it has no debt service payment obligation to the fund.