The International Monetary Fund has placed the blame for Zimbabwe’s economic woes squarely on the shoulders of Finance and Economic Development Minister Professor Mthuli Ncube, stating that his policies have simply been detrimental to the economy of the country. These comments came after the recent visit to Zimbabwe which the Fund has agreed a staff monitored programme (SMP) with. The SMP was heralded as a great first step in allowing Zimbabwe back into accessing funding from the IMF but the findings so far will not be encouraging.
Gene Leon, African Development head at the IMF reported after the two week scheduled visit that the country has seen its economic turmoil worsen due to policies pursued b the finance minister. They cited the rapid currency depreciation, losing 84% of its value since official trading was allowed in February this year.
Inflation, as expected was another major talking point of the visit and the 288.5% recorded in the month of August (reported September) was specifically referenced. Zimbabwe suspended publication of year-on-year inflation rate and the 288.5% is derived from the month on month calculation. However many would quickly point out that inflation in the nation is likely much higher than that.
The IMF also took time to shed the light on the Reserve Bank of Zimbabwe’s quasi-fiscal activities as the Bank continues to issue treasury Bill’s for government borrowing in a time when the government continues to claim a budget surplus. The recent public sector wage increase which the IMF strongly advised against also counted heavily against the finance minister.
The budget deficit was listed as an area of concern by the IMF team due to the impending agriculture season and the need to finance it. This would likely push the overall budget deficit into the unmanageable territory. In the years 2013 to 2019, the government of Zimbabwe has racked up massive domestic debt amounting to ZWL$10 billion in that period alone. This was originally in US dollars however the introduction of the Zimbabwean dollar via statutory instrument translated the money to Zimbabwean (then RTGS) dollars at 1:1.
The IMF noted the socio-economic deterioration currently being experienced in Zimbabwe. Millions of Zimbabwean are currently food insecure as both economic mismanagement and unfavourable rainfall have affected agricultural output. Zimbabwe is currently in the grips of a major power crisis which has stifled the few producing businesses that have managed to survive. In short supply too is fuel which is used as an alternative energy source.
The report also noted Zimbabwe’s failure to engage the international community as this would open up opportunities for greater assistance. While the government has chanted Zimbabwe is open for business doe nearly 2 years now there is precious little to show in results for it.