Zimbabwe requests more time from IMF

Zimbabwe requests more time from IMF
Published: 27 March 2014
ZIMBABWE has requested more time from International Monetary Fund (IMF) to manage its wage bill as it could result in retrenchments of civil servants, a government official has said.

In an update following the visit by the IMF team for the annual Article IV consultation, Finance minister Patrick Chinamasa said addressing employment costs needed more time.

"The issue of employment costs as a proportion of the budget was under discussion and I have told them that as for employment costs, we cannot address it in the short to medium term as it requires a longer process. It is not something we can address overnight.

Addressing them overnight will result in drastic measures which I indicated to them I am not able to take as it would mean retrenchment of civil servants and so on," Chinamasa said.

"I informed them that I propose to address them in the long term  through growing the economy; increasing revenue base (and) increasing Gross Domestic Product so that employment costs can take the appropriate proportionate in a bigger cake."

Under the supervised economic reform plan, the Staff-Monitored Programme (SMP), government was expected to reduce the wage bill currently gobbling over 50% of the budget every year.

Between January and November last year, employment costs amounted to $2,4 billion accounting for 69% of total expenditure against a target of $2,28 billion.

The IMF team also looked at Zimbabwe's progress in implementing some of the benchmarks under the SMP.

Under the SMP, Zimbabwe promised to review the legal framework for viability in the mining sector.

Chinamasa said his ministry was on a wider consultation exercise on how to review mining legislation, adding that it would take some time to effect.

"We have had three full day meetings through workshops with the Ministry of Mines and again this will take some time," he said.

Chinamasa said consultations with banks were currently underway on how the financial services sector would be reformed.

He said going forward the IMF would look at the matter in June when they visit the country again.

Chinamasa said he had advised the IMF to take a look at the country as a member not as a creditor so that constructive engagement could be enhanced.

Turning to the issue of debt Chinamasa said the country had no capacity to service in a meaningful way, but was settling its obligations in minimal installments.

Zimbabwe has an external debt of $6,1 billion which has made it difficult for the country to access funding from other creditors.

Chinamasa said the Bretton Woods institutions were looking at providing debt relief to Zimbabwe.

- newsday
Tags: IMF,

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