Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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IMF team to assist govt on mid-term budget

IMF team to assist govt on mid-term budget

Sunday, 12 June 2011 14:10


AN international Monetary Fund (IMF) team will be in the country for a one 
week mission starting Wednesday to assist government to come up with a 
mid-year budget statement.

The missions will be headed by Vitaliy Kramarenko.

“The objective of the mission is to review recent economic developments and 
assist the government in the preparation of the mid-year budget statement,” 
said Alistair Thomson, IMF press officer, External Relations Department.

The mid-year statement will chart the way forward for the economy, which 
risks failing to meet its targeted growth due to uncertainties caused by the 
empowerment regulations, according to an assessment by the IMF executive 

“An inefficient composition of expenditure, rising vulnerabilities in the 
financial system, and the recent announcement of the fast-track 
indigenisation of the mining sector would be a drag on the recovery and 
cause growth to decelerate to 5,5%,” IMF said.

The Minister of Finance, Tendai Biti had estimated a growth of 9, 3% this 

Kramarenko’s team comes at a time when there are two IMF missions on the 
ground and highlights the global lender’s commitment to help Zimbabwe out of 
the woods by providing technical assistance in key areas.

Technical assistance by the IMF to Zimbabwe, which was suspended in 2002, 
resumed in 2009 following the creation of an inclusive government.

In restoring the technical assistance support in 2009, IMF said it had taken 
into account “a significant improvement in Zimbabwe’s cooperation on 
economic policies to address its arrears problems and severe capacity 
constraints in the IMF’s core areas of expertise that represent a major risk 
to the implementation of government’s macro economic stabilisation 

Zimbabwe cannot get lines of credit from IMF until the country clears the 
US$141 million debt under the Poverty Reduction Growth Trust.
The country has agreed to pay quarterly payments towards settling the debt 
and increasing payments over time as the country’s payment capacity 
increases, IMF said on Thursday.

But the global lender warned of rising vulnerabilities in the banking system 
and said the restructuring of the Reserve Bank of Zimbabwe (RBZ) and 
strengthening of prudential regulations and their enforcement to contain 
liquidity, solvency, and credit risks must be the priority.

“These steps will help mitigate financial sector vulnerabilities and ensure 
the medium-term viability of the multi-currency system,” it said.

Confidence in the banking sector fell once again recently after problems at 
ReNaissance Bank where directors abused depositors’ funds and  prudent 
corporate governance was disregarded.

Although the central bank reacted by placing the bank under curatorship, 
observers felt that the regulator had been caught napping. RBZ is undergoing 
major restructuring to align the bank to international best practices.

The bank is now concentrating on its core business and is set to sell seven 
non core assets and close the chapter on the era of quasi-fiscal activities.

IMF technical assistance to Zimbabwe

IMF has two missions in the country as part of its technical assistance to 
build its capacity.

There is a technical assistance mission on tax administration which started 
on May 31 and will be running up to June 3.

Its brief is to review the status of tax administration reforms and make 
recommendations to update the reform and modernisation strategy.

There is also a technical assistance team on public finance management, 
which started on Tuesday and runs up to June 17.

“The objective of the mission is to strengthen the fiscal reporting and 
oversight of public sector,” IMF said.


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