ZIMBABWE’S economy is this year projected to register 6% growth buoyed by agricultural output, the International Monetary Fund (IMF) has said.
BERNARD MPOFU
The country, which experienced two years of decline between 2019 and 2020 due to the Covid-19 pandemic and other exogenous shocks, is this year expected to recover, according to an IMF team which recently concluded a virtual staff visit with the Zimbabwean authorities. The staff visits, from June 1–15, discussed recent economic developments and the outlook.
“Despite the authorities’ timely actions to support the most vulnerable groups and businesses during the pandemic, real GDP contracted by 4 percent in 2020, after a 6 percent decline in 2019,” the IMF mission said in a statement.
“However, an economic recovery is underway in 2021, with real GDP expected to grow by about 6 percent, reflecting a bumper agricultural output, increased energy production, and the resumption of greater manufacturing and construction activities. Uncertainty remains high, however, and the outlook will depend on the pandemic’s evolution, the pace of vaccination and implementation of sustainable policies.”
The multilateral lender said Zimbabwe should implement far-reaching economic and political reforms which will form the bedrock for normalising relations with her creditors and access long-term funding.
“Further efforts are needed to solidify the stabilisation trends and accelerate reforms. The near-term macro-economic imperative is to improve the coordination among fiscal, foreign exchange and monetary policies, while addressing Covid-19 related economic and humanitarian challenges. In line with the last Article IV consultation, the mission highlighted that structural reforms aimed at improving the business climate and reducing governance vulnerabilities are essential for ensuring sustained and inclusive growth,” the IMF said.
“To this end, the authorities’ strategy and policies as embodied in their National Development Strategy need to be fully operationalised and implemented. Durable macro-economic stability and structural reforms would bode well for the recovery and Zimbabwe’s development objectives.
“Zimbabwe has been a Fund member in good standing since it cleared its outstanding arrears to the IMF in late 2016. The Fund provides extensive technical assistance in the areas of economic governance and financial sector reforms, as well as macroeconomic statistics. However, the IMF is precluded from providing financial support to Zimbabwe due to an unsustainable debt and official external arrears. A Fund financial arrangement would require a clear path to comprehensive restructuring of Zimbabwe’s external debt, including the clearance of arrears and obtaining financing assurances from official creditors; a reform plan that is consistent with macro-economic stability, growth and poverty reduction; a reinforcement of the social safety net; and governance and transparency reforms.”
The IMF projections are above the World Bank conservative forecast of 3.9% growth. The World Bank, one of Zimbabwe’s key creditors, last week said while the country is this year expected to recover from two years of contraction, serious headwinds continue confronting the fragile economy.
