IMF team visits Harare

The International Monetary Fund (IMF) has stressed the need for measures to restore confidence in Zimbabwe’s economic future, “particularly through an orderly land reform process”.

The IMF said in a statement on Monday that the economic situation in Zimbabwe was “deteriorating rapidly” with poverty rising. The statement, based on a staff assessment visit from 3-15 September, added that the team made a number of recommendations on macroeconomic policies. “The team recommended that the primary budget balance (which excludes interest payments) be in substantial surplus in 2002. The loose monetary policy since early this year has led to a rapid increase in asset prices, an acceleration of inflation and a sharp depreciation of the Zimbabwe dollar on the parallel market,” said the statement. “The team recommended an immediate tightening of monetary policy to reduce inflation, which has been particularly harmful for small savers, pensioners and the poor.”

According to the statement the mission “welcomed” the targeted social nets that have been designed to address the current food crisis and protect the poor and recommended that low priority expenditures be reduced to allow their expansion. “It noted the risks to food security posed by control, such as the reinstitution of the Grain Marketing Board monopoly on maize and wheat distribution and urged that all such controls be removed,” said the statement.

It added that the team “urged” the government to adopt comprehensive adjustment policies that would “restore growth and alleviate poverty”. “Such policies would provide a basis for clearing arrears (that Zimbabwe has with the IMF) and an eventual resumption in financial support from the IMF and other creditors and donors,” the statement said.

The IMF team also met with representatives of civil society such as non-governmental organisations, the business and financial communities, political parties and trade unions.