International financial institutions (IFIs) this week expressed concern over the country’s fiscal indiscipline and sluggish pace of reforms as the Staff-Monitored Programme (SMP) between the International Monetary Fund (IMF) and President Emmerson Mnangagwa’s government hangs in the balance due to failure by Harare to meet set targets.
Officials from IFIs who spoke to the Zimbabwe Independent said they are worried about the country’s budget figures which are far removed from those presented by Finance minister Mthuli Ncube in the 2020 national budget and approved by parliament.
“The figures in the budget approved by parliament are very different from the budgetary figures now,” a well-placed source pointed out. “This makes it very difficult because it is unpredictable. What it is today is different from what it will be tomorrow.”
The concerns raised by IFIs are critical to the success of any SMP between the IMF and Zimbabwe. The SMP, an informal arrangement between the government and the IMF to monitor the implementation of key economic programmes in the country, is crucial for the cash-strapped government’s ability to regain access to funding from IFIs. Government was cut off from access to concessionary funds after failing to pay debt arrears.
A successful SMP would have rekindled the country’s hope of getting funding it desperately needs to turn around the ailing economy characterised by a debilitating liquidity crunch, foreign currency and fuel shortages as well as prolonged power outages and runaway inflation.
Government’s efforts to get a bailout package, even from its “all-weather friend” China, have hit a brick wall due to concerns over fiscal indiscipline, lack of reforms and its checkered debt repayment history.
The IMF revealed in a report on its 2020 Article IV Consultation with Zimbabwe, following its board meeting in Washington on Monday this week, that the SMP, which was adopted in May last year, is now “off track” after government’s failure to meet set targets.
“The government that came into office following the 2018 elections adopted an agenda focussed on macro-economic stabilisation and reforms. This was supported by a Staff-Monitored Programme from the IMF, adopted in May 2019, but is now off track as policy implementation is mixed,” the Bretton Woods institution noted.
However, sources said both the IMF and government remain hopeful that the SMP can be resumed in a re-calibrated format.
“There is hope from both sides that the SMP can get back on track. There will be discussions on the way forward on the SMP with a decision likely to be made by the time the Fund holds its Spring Meetings in April this year,” a source revealed, adding that there is a “51% chance” of the SMP being resumed.
The Spring Meetings will take place in Washington from April 13 to April 19.
