JOHANNESBURG, March 24 (Reuters) – The International Monetary Fund on Thursday welcomed Zimbabwe’s steps towards economic recovery and engaging with its creditors, but said more needs to be done following mixed implementation of its past advice.
The fund said in November that it was unable to provide financial support to the southern African country, which has suffered amid bouts of hyperinflation in the last 15 years, until there was a clear path to restructuring its unsustainable levels of debt.
On Thursday, IMF directors noted that Zimbabwe had developed a debt resolution strategy and started token payments to creditors in an attempt to re-engage, but said that the impact of this has lagged as stakeholders want to see political and economic reforms.
The implementation of the fund’s own past advice had been mixed, IMF directors continued in a statement concluding the fund’s 2022 Article IV consultation with Zimbabwe, adding policies recommended under a 2019 staff monitored programme in particular slipped.
“Directors encouraged the authorities to advance reforms, noting that a new staff monitored programme could help establish a track record of sound policies and provide further impetus to their (Zimbabwe’s) re-engagement efforts,” the statement read.
Zimbabwe has over $10 billion in external debt, mostly in arrears. It has not received funding from lenders like the IMF and World Bank for more than two decades as a result.
Its creditors include the World Bank, African Development Bank, European Investment Bank and the Paris Club.
The fund said the economic recovery Zimbabwe saw in 2021 is expected to continue, albeit at a slower pace, with growth projected at 3.5% in 2022.
It called for reforms including greater exchange rate flexibility to allow for a more transparent, market-driven process, greater central bank independence, a broadening of the tax base and tighter spending controls.