Misheck Shambare

Zimbabwe might be looking to the east in terms of investment and trade but it still has interest in working with the West which was revealed at the just ended International Monetary Fund (IMF)  mission to the country.

This was revealed by the Head of Mission  Domenico Fanizza during  a  press briefing in Harare.  The mission lasted  from September 17 to October 1 2014 and was intended to  conduct the third and last review under the Staff Monitored Projects (SMP) that was approved by the IMF management in June 2013.

It was also intended to hold discussions on structural benchmarks under the program and the mission reached a staff level agreement on policies for successor SMP.

At the conclusion of the visit, it came to light that the government of Zimbabwe cannot address the economic challenges without the support of the international financial community.

The poor relations that had existed between the Western countries and Zimbabwe had been proved to be a thing of the past since the government agreed that it will engage the Western leading financial lending institution and implement reforms and policies.

Economic analyst John Robertson applauded the country for making such insignificant strides towards the re engagement of the IMF with this country.

“There are greater chances that the IMF SMP will succeed since the country has showed great commitment in cooperating with the IMF mission team,” he said.

Part of the report that was presented by the IMF mission team to the Ministry of Finance  urges that Zimbabwean authorities take decisive fiscal measures on the revenue and expenditure sides to keep fiscal policy on track and to protect social expenditures, despite the large civil service wage increase earlier in 2014.

“The IMF has been satisfied by the willingness of the government to join them and has complied to IMF requirements which is a positive thing in mending the struggling economy the country has been facing,” said Robertson.

80 percent of Zimbabwe’s money is used in the wages of the government which the IMF advocated for the reduction of wage bill which they say is large for this country.

Finance Minister Patrick Chinamasa and his team which included the Governor of Reserve Bank of Zimbabwe Dr John Mangudya agreed on reducing the wage bill but could not comment further how they were going to approach it.

On the reduction of the wage bill, John Robertson said it is likely that the country was going to cut salaries and retrench unnecessary staff on government pay roll.

“The government is likely to cut salaries for over 300000 people and retrench redundant staff in some of its departments,” he said.

The IMF mission also added that the Zimbabwean government had come to lay the ground for a stronger, more inclusive and a lasting economic growth while at the same time addressing economic challenges.

Another economic analyst Tony Hawkins said that there is no country that will not borrow money from financial institutions.

“Even America borrows money to sustain itself and it’s vital for Zimbabwe to re-engage such large financial institutions as IMF,” he said.

The SMP focuses on putting public finances on a sustainable course, while protecting infrastructure investment and priority social spending, strengthening public financial management, increasing diamond revenue transparency, reducing financial sector vulnerabilities, and restructuring the central bank.

Zimbabwe has made considerable progress in stabilizing the economy since the end of hyperinflation in 2009. Since then, GDP has grown by an average of over 7 percent and inflation has remained in the low single digits, thanks largely to the multi-currency system. Government revenues have more than doubled from 16 percent of GDP in 2009 to an estimated 36 percent of GDP in 2012, allowing the restoration of basic public services.