Once seen as an enemy by many top government officials in Zimbabwe, the International Monetary Fund (IMF) has commenced talks with the government of the southern African country to review its economic performance, as it seeks a financial aid to help save its economy.
Zimbabwe started to default on debts to the IMF, World Bank, African Development Bank and several Western lenders in 1999, for the body to stop assisting the country which is now struggling to get back to its feet after a decade-long recession. It has now agreed to pay international lenders such as the IMF, World Bank and African Development Bank about $1.8 billion, hoping that the IMF would resume lending to the county this year.
Reuters reports that an IMF team met government representatives on Wednesday under the final phase of a Staff Monitoring Programme. The team will also meet central bank officials and local business leaders.
“The team is also doing the annual Article IV consultation, which is an important ingredient in the re-engagement process,” Christian Beddies, the IMF representative in Zimbabwe said.
During an Article IV consultation, an IMF team of economists visits a country to assess economic and financial developments and discuss the country’s economic and financial policies with government and central bank officials.
President Robert Mugabe-led Zimbabwe started a Staff-Monitored Program (SMP) in 2013 dumping some policies which had hindered its recovery following years of recession.
An SMP is an informal agreement between country authorities and Fund staff to monitor the implementation of the authorities’ economic program. SMPs do not entail financial assistance or endorsement by the IMF Executive Board. The 2013 program was Zimbabwe’s first IMF agreement in more than a decade. The targets set in December 2013 were met by Zimbabwe showing commitment to its economic reforms.
According to Reuters, a senior treasury official said Zimbabwe hoped to begin negotiations this year on new financial aid. This requires difficult reforms, including cutting the state wage bill which currently eats up 82 percent of the national budget.
Beddies says Zimbabwe may start receiving IMF aid again, this year, if foreign creditors accept its plans to clear arrears and implement economic reforms.