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International Monetary Fund. African Dept.

2017 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Zimbabwe

International Monetary Fund. African Dept.
This 2017 Article IV Consultation highlights that Zimbabwe’s economy is facing difficulties. A severe drought and slow reform momentum have led to high expenditure levels since late 2015 despite subdued revenues. With limited access to foreign inflows, the ensuing fiscal imbalances have become unsustainable, and are being financed by rising domestic borrowing. Growth in 2017 is expected to be supported by a strong performance in agriculture mainly owing to exceptional rains. However, economic activity in the medium term is projected to remain subdued, pending adjustment and reform that tackle the structural challenges and enable the economy to restore fiscal and external sustainability and achieve its growth potential.
International Monetary Fund. African Dept.

2017 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Zimbabwe

International Monetary Fund. African Dept.

Context. The authorities met all their commitments under the Staff-Monitored Program (SMP), despite economic and financial difficulties. Inadequate external inflows, lower commodity prices, the dollar appreciation, and the El-Niño-induced drought hurt economic activity. The authorities have started to rationalize civil service by exploiting opportunities for cost savings, amended the Public Financial Management and Procurement Acts for Parliament and Cabinet approval, respectively, and rid the financial sector of problem banks and reduced non-performing loans. They garnered broad support for their reengagement strategy from creditors and development partners, in particular their plans to clear arrears to the International Financial Institutions.

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.

Context. The authorities met all their commitments under the Staff-Monitored Program (SMP), despite economic and financial difficulties. Inadequate external inflows, lower commodity prices, the dollar appreciation, and the El-Niño-induced drought hurt economic activity. The authorities have started to rationalize civil service by exploiting opportunities for cost savings, amended the Public Financial Management and Procurement Acts for Parliament and Cabinet approval, respectively, and rid the financial sector of problem banks and reduced non-performing loans. They garnered broad support for their reengagement strategy from creditors and development partners, in particular their plans to clear arrears to the International Financial Institutions.

International Monetary Fund. African Dept.

Context. The authorities met all their commitments under the Staff-Monitored Program (SMP), despite economic and financial difficulties. Inadequate external inflows, lower commodity prices, the dollar appreciation, and the El-Niño-induced drought hurt economic activity. The authorities have started to rationalize civil service by exploiting opportunities for cost savings, amended the Public Financial Management and Procurement Acts for Parliament and Cabinet approval, respectively, and rid the financial sector of problem banks and reduced non-performing loans. They garnered broad support for their reengagement strategy from creditors and development partners, in particular their plans to clear arrears to the International Financial Institutions.

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.
Ms. Sandra Marcelino and Ms. Ivetta Hakobyan
In 1996, the IMF and the World Bank introduced the Heavily Indebted Poor Countries Initiative—a comprehensive debt relief program aimed at reducing the external debt burden of eligible countries to sustainable levels, provided they carry out strong programs of macroeconomic adjustment and structural reforms designed to promote growth and reduce poverty. Now that the HIPC Initiative is nearly completed, this paper investigates whether the initiative managed to spur growth, either directly or indirectly through investment. In contrast to earlier studies, we conclude that there is some evidence of positive effects of the HIPC Initiative on growth. Such evidence suggests that the HIPC Initiative and MDRI have helped HIPC-eligible countries to reach higher growth, but it remains unclear whether this is through higher investment or another channel. Also, the analysis illustrates that it is hard to disentangle pure debt-relief effects from other concurrent factors.