Zimbabwe would be working hand in hand with the IMF on policy reforms. A staff-monitored program means that IMF staff on the ground would keep a close eye on economic policies and targets. The staff monitored program does not entail any financial support. Essentially we will have more eyes looking at the results of economic policies. It is not clear how that will bring stability to our ailing economy. Many times we have been told that everything is fine if not great with the economy. Zimbabwe is not new to the staff-monitored program with a long history of arrangements with the IMF the last being in 2013.
Speaking on the issue at the end of the mission to Zimbabwe, IMF team leader Mr Leon issued the following statement:
“IMF staff and the Zimbabwean authorities have reached agreement on macroeconomic policies and structural reforms that can underpin a Staff-Monitored Program. Zimbabwe is facing deep macroeconomic imbalances, with large fiscal deficits and significant distortions in foreign exchange and other markets, which severely hamper the functioning of the economy. In addition, Zimbabwe is facing the challenge of responding to the adverse effects on agriculture and food security of the El Nino-related drought, as well as the devastation from Cyclone Idai.”
“The SMP, which will be monitored on a quarterly basis, aims to implement a coherent set of policies that can facilitate a return to macroeconomic stability. Successful implementation will assist in building a track record and facilitate Zimbabwe’s re-engagement with the international community. The policy agenda to be monitored under the SMP is anchored on the authorities’ Transitional Stabilization Program and emphasizes fiscal consolidation, the elimination of central bank financing of the fiscal deficit, and adoption of reforms that allow market forces to drive the effective functioning of foreign exchange and other financial markets. In addition, the agreed policies—both macroeconomic and structural—can be expected to remove critical distortions that have held back private sector growth and to improve governance. The SMP also includes important safeguards to protect the country’s most vulnerable people. This staff-level agreement is subject to review by the IMF’s management.”
That the IMF will work towards the policies in the Transitional Stabilization Program will come as a boost to the government who have hailed the document as good policy. It may, however, be the very reason it fails to inspire confidence in the citizenry and business who so far have experienced little joy if any under the program. Inflation rages on, salaries are stagnant, the foreign currency and monetary situation have not seen any improvement.