The Sunday Mail
Kudzanai Sharara
The Staff Monitored Programme (SMP) that was agreed upon by Government and the International Monetary Fund (IMF) will be used to help authorities implement and monitor key policies that are outlined in the Transitional Stabilisation Programme and help the country build a record of sound economic policies.
The IMF uses the SMP to help Governments implement a coherent set of policies that can facilitate a return to macroeconomic stability.
According to IMF’s Zimbabwe representative Patrick Imam, if implemented successfully, the SMP will put Zimbabwe “on a sustainable growth trajectory and help build a track record of sound economic policies as it seeks to normalise its relations with external creditors”.
The SMP, which will be implemented from May 2019 to March 2020, with quarterly reviews, will help restore macroeconomic stability through the reduction of the fiscal deficit while maintaining investment in key infrastructure and priority social spending, said Mr Imam in an interview with The Sunday Mail Business.
“The SMP is anchored on a revised budget that seeks to do away with central bank financing of the budget, which is critical to support the new currency.”
In the TSP, Government also plans to strengthen Public Finance Management frameworks and reform State-owned enterprises. Tackling governance and corruption vulnerabilities is also on the agenda.
Mr Imam said one reason why the IMF had agreed to work with the Zimbabwean authorities is because of the soundness of the TSP, which saw the authorities committing to “stop monetary accommodation of the fiscal deficit”, something which has been causing financial vulnerabilities to the entire banking and financial system.
This, the IMF said, should help stabilise inflation as well as the currency.
The country’s inflation is currently on the high side, at 75,8 percent, but authorities expect it to peter out towards year-end.
Mr Imam said chances of the SMP being successful are very high as it will bank on policies that were crafted by Government.
“The key to a successful programme is ownership. And I am confident that there is ownership for three reasons:
“First, the SMP is drawn from the Transitional Stabilisation Programme (TSP); in other words, the SMP is simply implementing the TSP, which is a home-grown reform programme. This consistency is important to allow for the smooth implementation of the SMP programme,” he said.
The country’s economic policies are currently anchored on the TSP, a policy which outlines policies, strategies and projects that guide Zimbabwe’s social and economic development interventions up to December 2020.
The policy prioritises fiscal consolidation, economic stabilisation, growth and employment creation.
Mr Imam said the second reason why the SMP will succeed is because Government is cognisant of the fact that for its re-engagement agenda to find traction, it will depend on the successful implementation of the SMP.
“Without it, clearance of arrears to the international financial institutions and eventually an agreement with bilateral creditors and a Fund financial programme will not be feasible,” he said.
“The economic rewards to a successful SMP are therefore potentially significant.”
Mr Imam also expressed his confidence in the economic team headed by Finance and Economic Development Minister Mthuli Ncube, which he said is committed to improve the economic lot of the people.
“They are fully aware of the short-term sacrifices that the reforms entail to reap the longer-term rewards for the people of Zimbabwe.”
What’s in it for the IMF?
Mr Imam said the IMF always tries to help a country when the authorities want to reform and the right economic conditions are in place to achieve macroeconomic stability, no matter how risky the situation is.
Agreeing to work with the Zimbabwean authorities is thus a clear testimony that the global fund is satisfied with Government’s commitment to reform.
No access to funding as yet
Mr Imam, however, said Zimbabwe is not yet eligible to access funding from the IMF as it still has arrears to other international organisations, as well as bilateral arrears.
“The conditions are not yet in place for the IMF to provide financial support for Zimbabwe. Zimbabwe will need to go through a comprehensive debt clearance framework with the international community first,” he said.
Mr Imam said Zimbabwe needs to build a track record to prove that it can implement reforms to tackle deep-rooted problems, as the hurdle rate for a financially supported programme is high.
“The SMP aims to achieve this track record.”
