Is IMF shifting goal posts on Zim?

Tawanda Musarurwa
HARARE. — The International Monetary Fund (IMF) appears to have shifted positions ahead of the completion of an ongoing third review of Zimbabwe’s Staff Monitoring Programme after it raised “new” concerns about current reforms.

IMF resident representative in Zimbabwe Christian Beddies told a special meeting with the Parliamentary Portfolio Committee on Budget and Finance that they had concerns with the broader implications of the role of the Zimbabwe Asset Management Corporation (ZAMCO).

Mr Beddies appeared before the committee together with visiting IMF head of delegation Dominique Fanezzi on Wednesday.

He said the IMF was concerned that the debts being accrued by ZAMCO would become a “liability to the State”.

“But much of this debt being held by ZAMCO is being held on corporations which are essentially insolvent.

“If you look at the list of companies, Cottco, CSC . . . these private sector and state-controlled companies are essentially insolvent and I am deeply concerned that the Government is taking over debt which could eventually become a liability to the State,” said Beddies.

“And I think that the liabilities taken over by the State on the domestic market in the last two years, you have your $1,7 billion worth of debt from the RBZ which will be assumed by the Ministry of Finance, you have the half a billion dollars, and Government tells us it’s going to be $800 million worth of debt in ZAMCO, which should technically be a liability to the State.”

The “new” reservations by the IMF appear to contradict its observations on ZAMCO following the second review of the staff-monitored programme last October.

At the time the multilateral financier said: “ZAMCO, which is now functional, has begun acquiring eligible NPLs, financed by long-term Government securities.

“This should help restore financial sector viability by strengthening banks’ balance sheets and providing them with much needed liquidity . . . The work of ZAMCO is being complemented by the recently introduced credit registry and reference system.

“To cement financial stability and reinforce confidence, NPLs need to decline further.

“The authorities expect that their multi-pronged approach will further reduce NPLs to 5 percent by end of 2016.”

Beddies also told the Parliamentary Portfolio Committee that the issuance of treasury bills was increasingly becoming a major concern.

“You have a budget deficit in 2014 of $1 billion, you have a budget deficit in 2015 of nearly $1,5 billion. Much of this debt is financed with treasury bills and we do not know what the stock of treasury bills are at this juncture. But the treasury bill issue is a major emerging factor, interest on treasury bills this year will be a quarter of a billion dollars. It’s a major item in the budget now.

“You can’t afford to have these treasury bills as a semi-permanent domestic debt element, and I am concerned about that,” he said.

He also said proposed labour law reforms were yet to take off, while clarifications on the indigenisation policy were ‘superficial’.

Following the completion of the second review last year, Fanizza said if Zimbabwe succeeded in the third review, it would get a three-year credible reform programme, raising optimism that the country’s economic fortunes were based on the successful completion of the SMP as it will pave way for the country to pay off its $1,8 billion arrears to three preferred creditors, as agreed during the Lima meetings last year.

Fanezzi told the committee that the SMP is just an initial step to show that the country could implement some reforms that were required for a “real programme with the fund.” — BH24.

March 2016
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