Zimbabwe sees deal for an IMF staff-monitored programme in October

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Zimbabwe sees the signing of an International Monetary Fund staff-monitored programme taking place in October, according to Finance Minister Mthuli Ncube.

It will be the first time that the southern African nation will be placed under a programme overseen by the Washington-based lender in five years. A previous programme was abandoned in early 2020 after the Fund said that programme had gone “off-track” with policy implementation from the government mixed.

An IMF staff-monitored programme is key for Zimbabwe, which is seeking to clinch a deal with its creditors for the clearance of $19.2 billion in arrears, Ncube said at a meeting on the sidelines of the African Development Bank’s annual meetings held Wednesday in Nairobi, Kenya.

Since 1999, the country has been locked out of international capital markets after defaulting on its debts. It counts among its list of creditors the World Bank, Paris Club, European Investment Bank and the AfDB.

“The IMF mission will be visiting the country over the period of June 18 to June 27 for Article IV consultations and SMP negotiations and we expect to conclude these negotiations in October 2024,” said Ncube. “The signing of an SMP with the IMF is expected with the IMF by October; that’s a month before the deadline in November.”

A switch by the southern African nation to a new currency last month was recently described an important step by the IMF in its first substantive comments. The ZiG, short for Zimbabwe Gold, is the nation’s sixth attempt to have a functioning local currency in 15 years. It is backed by 2.5 tons of gold and $100 million in foreign-exchange held by the central bank.

The new currency has shown that it’s stable and had “a welcome impact on inflation,” Ncube added. Data released by the Zimbabwe National Statistics Agency earlier Wednesday, showed that monthly inflation measured for the first time in ZiG currency terms fell to 2.4% in May.

Meanwhile, the southern African nation plans compensation payouts to former White commercial farmers from July. The expected payouts will also include farmers who lost their land covered by so-called “Bilateral Investment Protection and Promotion Agreements,” which protect foreign investments from any policy shifts adopted by the host state.

Zimbabwe has issued advertisements in local media advising farmers covered by Bippa who had their land seized in the 2000s to approach Treasury to make claims. The government has set aside a total $55 million to make payments to both farmer groups, according to Ncube, with $20 million of that amount ring-fenced for farmers who fall under the Bippa agreements.

“Government made an offer to the former farm owners for their compensation which entails an upfront payment of 1% of the capital amount of $35 million to be paid in year one and issuance of US dollar-denominated Treasury bonds with maturities ranging from two to 10 years, with a coupon of 2%,” said Ncube.