Zimbabwe faces large financing gap in 2011: IMF
Tue Apr 5, 2011 6:05am GMT
WASHINGTON (Reuters) – The International Monetary Fund on Monday warned that
Zimbabwe faced a significant budget financing gap this year amid a highly
uncertain economic outlook, making clear it was not about to resume lending
to the southern African country.
In a statement after talks with Zimbabwe’s authorities in the capital
Harare, the IMF said the country’s budget was skewed by a massive public
wage bill and not enough resources for social programs for the poor and
important infrastructure spending.
It said the short-term growth potential, especially in mining, was strong
amid higher global commodity prices.
“Despite historically high commodity prices … and impressive progress in
revenue mobilization, a relatively sizable fiscal financing gap would emerge
in 2011,” IMF mission chief to Zimbabwe Vitaliy Kramarenko said in a
statement.
“The fiscal gap could be eliminated through the removal of ghost workers
from the payroll, reinforced controls on employment levels, and a reduction
in low-priority transfers to state-owned enterprises,” he added.
He said Zimbabwe’s policy to force foreign mining companies to transfer
majority stakes to local black partners was among issues weighing on growth
and efforts to reduce poverty.
Zimbabwe said last month it would give foreign mining firms six months to
sell majority stakes to black investors as part of black empowerment
efforts.
A unity government under President Robert Mugabe and rival Prime Minister
Morgan Tsvangirai has stabilized Zimbabwe’s economy but has failed to
attract much needed investment to rebuild the devastated economy.
The pair are divided on how to implement the empowerment law that would
require foreign-owned companies, including banks and mines, to surrender 51
percent of their shares.
Kramarenko said Zimbabwe was a country in “debt distress,” and the situation
was made worse by recent deals in which the government had borrowed money at
very high rates.
It said strengthened policies and debt relief would be important for
Zimbabwe to deal with its arrears.
The Fund said it would continue “close policy dialogue” with Zimbabwe, but
made clear it would not lend to the country until the government had
established a track record of policies, and had agreed to a comprehensive
strategy for clearing its arrears to government creditors.