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International Monetary Fund. Research Dept.

Giovanni Melina

International Monetary Fund. Finance Dept.
This paper discusses Zimbabwe’s Settlement of Overdue Financial Obligations to the Poverty Reduction and Growth Trust (PRGT), Lifting of Declaration of Noncooperation, Lifting of Restriction on IMF technical assistance, and restoration of PRGT eligibility. In light of Zimbabwe’s settlement of its overdue financial obligations to the PRGT, the IMF staff proposes that the Board remove the remaining remedial measures. Zimbabwe is eligible to return to the PRGT-eligibility list. The IMF staff also proposes that the Board lift the declaration of noncooperation, remove the remaining restriction on the provision of IMF technical assistance, and reinstate Zimbabwe as a PRGT-eligible country.
International Monetary Fund. African Dept.
This paper discusses recent developments, outlook, and risks related to the economy of Zimbabwe. Zimbabwe’s economic difficulties have deepened. GDP growth slowed significantly to 1.1 percent in 2015, mainly because of the impact of adverse weather conditions on agricultural output, and power generation. The current account balance improved in 2015, because of lower prices for oil imports, subdued economic activity, and fiscal consolidation efforts. Fiscal performance in 2015 was better than programmed, despite the adverse macroeconomic environment. Despite spending pressures to mitigate the impact of the drought, the authorities remain committed to fiscal discipline; they target a primary cash deficit of 0.2 percent of GDP for 2016.
International Monetary Fund. African Dept.
This paper discusses Zimbabwe’s Second Review of the Staff-Monitored Program. The program is on track. Four of the five quantitative targets for end-June 2015, and all the structural benchmarks for the second review were met. Although a recently contracted $200 million nonconcessional loan breached the quantitative target on nonconcessional borrowing, it avoided the accumulation of additional external arrears. The IMF staff welcomes the authorities’ intentions to continue seeking financing through grants and loans that are as concessional as possible, and to limit contracting non-concessional loans to within the ceiling set under the program, and to prioritize investment that would eventually raise Zimbabwe’s capacity to repay.
International Monetary Fund. African Dept.
EXECUTIVE SUMMARY Context. The Zimbabwean authorities have made progress in implementing their macroeconomic and structural reform programs, despite the economic and financial difficulties. During 2015, the authorities’ policy reform agenda will continue to focus on: (a) reducing the primary fiscal deficit to raise Zimbabwe’s capacity to repay; (b) restoring confidence in the financial system; (c) improving the business climate; and (d) garnering support for an arrears clearance strategy. Recent developments, outlook, and risks. Zimbabwe’s economic prospects remain difficult. Growth has slowed and is expected to weaken further in 2015. Despite the favorable impact of lower oil prices, the external position remains precarious and the country is in debt distress. Key risks to the outlook stem largely from a further decline in global commodity prices, fiscal challenges, and possible difficulties in policy implementation. However, the authorities are committed to intensifying their efforts to ensure successful implementation of the program and to lay the ground for stronger, more inclusive, and lasting economic growth. Program performance. All quantitative targets and structural benchmarks for the first review under the staff-monitored program (SMP) were met. The authorities demonstrated strong commitment to the program, in a difficult economic and financial environment. Moreover, they have made meaningful progress in implementing other key structural reforms, such as making operational an asset management company and amending the indigenization and empowerment law. Reengagement with creditors. The authorities have stepped up their reengagement with creditors, including by increasing payments to the World Bank (WB) and the African Development Bank (AfDB), a key step in their roadmap toward seeking rescheduling of bilateral official debt under the umbrella of the Paris Club. These developments constitute important steps toward reengaging with the international financial institutions (IFIs). They plan to step up their efforts to build consensus among creditors and development partners on ways to address the external arrears.
International Monetary Fund. Secretary's Department

Abstract

Seven years after the onset of the global financial crisis, the world still has a way to go to secure a sustainable recovery marked by strong growth that supports rapid job creation and benefits all, International Monetary Fund (IMF) Managing Director Christine Lagarde says in her foreword to the institution’s Annual Report 2014—From Stabilization to Sustainable Growth, published today. The recovery is ongoing, but it is still too slow and fragile, subject to the vagaries of financial sentiment. Millions of people are still looking for work. The level of uncertainty might be diminishing, but it is certainly not disappearing.” Ms. Lagarde said that “throughout the crisis and in the recovery period, the IMF has been, and continues to be, an indispensible agent of economic cooperation” for its membership. The report covers the work of the IMF’s Executive Board and contains financial statements for the year May 1, 2013, to April 30, 2014. It describes the IMF’s support for its 188 member countries, with an emphasis on the core areas of IMF responsibility: assessing their economic and financial policies, providing financing where needed, and building capacity in key areas of economic policy.

International Monetary Fund. African Dept.
EXECUTIVE SUMMARY Zimbabwe’s performance under the Staff-Monitored Program (SMP) has been broadly satisfactorily through the difficult electoral transition period, and the authorities have taken corrective measures to restore a track record of policy implementation going forward. In the attached Letter of Intent (LOI), the authorities outline progress in implementing the SMP; the agreed quantitative targets and structural benchmarks to be monitored for the third review; and their plans to advance the structural reform agenda and to more generally strengthen performance under the SMP. Performance under the staff-monitored program. The SMP provided a useful anchor for Zimbabwe in an election year. However, progress in implementing the program was slowed by a long electoral process and a protracted post-election transition, as well as an adverse external environment. Thus, a number of quantitative targets and structural benchmarks were not met. The authorities have began implementing policy measures and a program of reforms aimed at addressing the fiscal gap that has emerged for 2014; improving the quality of public expenditures; enhancing financial sector stability; and moving forward delayed structural reform measures. The authorities have reiterated their continued commitment to the policies agreed under the SMP, and to enhanced engagement with the creditors and the international community. The authorities have agreed to the publication of the Letter of Intent, and the staff report.
International Monetary Fund. African Dept.

This 2014 Article IV Consultation highlights that economic rebound in Zimbabwe experienced since the end of hyperinflation in 2009 has now ended. After averaging 10 percent over 2009–2012, growth fell to an estimated 3.3 percent in 2013, reflecting tight liquidity conditions, election-year uncertainty, weak demand for key exports, competitiveness pressures, and the impact of adverse weather conditions. Inflation continued its downward trend from 2.9 percent (year over year) at end-2012 to ?0.3 percent in April 2014. The medium-term outlook, under the baseline scenario, is for growth to average some 4 percent, as large mining sector investments reach full capacity.

International Monetary Fund. Secretary's Department

Abstract

The IMF's 2013 Annual Report chronicles the response of the institution's Executive Board and staff to the global financial crisis and other events during financial year 2013, which covers the period from May 1, 2012, through April 30, 2013. The print version of the report is available in eight languages (Arabic, Chinese, English, French, German, Japanese, Russian, and Spanish), along with a CD-ROM (available in English only) that includes the report text and ancillary materials, including the IMF's Financial Statements for FY2013.