THE International Monetary Fund (IMF) has commended the move by president Emmerson Mnangagwa’s new government to simplify the country’s indigenisation policy as a step in the right direction for the economy.
IMF spokesman William Murray commented on the policy shift during a press conference in the U.S. this Thursday.
“They presented their 2018 budget on December 7th and that budget stresses that the government’s intention to re-impose budget discipline, reform and open the economy and engage with the broader international community,” Murray said.
“In this regard, the clarification and simplification of what’s called the Indigenization Policy is a step in the right direction.”
An IMF team was in the country a few days ago on a mission to assess the fiscal position and the new government’s economic plan.
“I don’t have anything specific from that mission to share with you at the moment but what I can tell you is what our general views are on Zimbabwe,” Murray said.
“Our understanding as a result of this mission but also in our ongoing context is that the authorities are cognizant of the challenges facing Zimbabwe and have expressed their determination to address them. “
Finance minister Patrick Chinamasa, in his recent presentation of the country’s 2018 budget said the indigenisation law, which limited foreign ownership of local companies to just 49 percent, would now apply to diamond and platinum mining only.
Meanwhile, Murray said Zimbabwe’s economy still faced real challenges militating against growth but indicated that a new trajectory was possible if Mnangagwa implemented key reforms.
“Unsustainable fiscal deficit has led to severe liquidity shortages, created inflationary pressures and threatened the viability of the financial sector and the exchange rate regime,” he said.
“Restoring growth will require concerted efforts to tackle the fiscal deficit, including through rationalizing and better targeting of the expensive agricultural support programs.
“These efforts should be complimented by structural reforms to strengthen the role of the private sector by improving the business climate and reducing policy uncertainty in Zimbabwe.”
The IMF remains committed to supporting government efforts directed at stemming the country’s economic crisis.Advertisement
“In addition to a strong and coherent reform program, a concerted international effort will be required to revive and reintegrate the Zimbabwe economy,” said Murray.
“An IMF financial arrangement, for example, would only be possible, and we were asked about this recently.
“It would only be possible after progress is made in resolving Zimbabwe’s arrears to other international financial institutions and other creditors.”