THE IMF has agreed to collaborate with Zimbabwe on a new Staff Monitored Programme (SMP), scheduled to begin in the fourth quarter of 2023. The decision was outlined in a report released by the Zimbabwe Public Debt Management Office in the Ministry
of Finance and Economic Development on Thursday.
The SMP is a crucial component of the policy actions that the Zimbabwean government is expected to execute under its arrears clearance and debt resolution roadmap, agreed with multilateral and bilateral creditors in February.
‘In line with the roadmap, in June 2023, upon the Zimbabw
ean government’s request, the International Monetary Fund agreed to start the process of engagement on a Staff Monitored Programme, which is expected to commence during the fourth quarter of 2023
,’ stated the Zimbabwe Public Debt Management Office in the report.
Apart from the SMP, the roadmap also involves several other policy actions. These include conducting free, fair, and peaceful elections in August, combating corruption, drafting legislation for transferable and bankable 99-year leases, addressing compensation for former white commercial farmers, and resolving some Bilateral Investment Protection and Promotion Agreements (BIPPAs).
The Zimbabwean government is also seeking a ‘wet’ SMP to safeguard the vulnerable during the implementation period. Funding is required to support social protection, education, health, agriculture/food security, and climate change initiatives.
To address the substantial external debt, the Zimbabwean government established a Structured Dialogue Platform with creditors, development partners, and stakeholders last December. Several meetings have been held in Harare to discuss economic and governance reforms and the resolution of BIPPAs.
Clearing arrears and resolving debt is deemed critical
for Zimbabwe to gain access to new external financing required for the country’s economic development. Although Zimbabwe cleared its 15-year outstanding debt arrears with the IMF, amounting to $108 million, in 2016, it remains ineligible for new loans from the institution until it settles arrears with other international financial institutions and bilateral creditors.
As of December 2022, Zimbabwe’s total public and publicly guaranteed external debt stood at $12.83bn, comprising $5.89bn of bilateral debt, $2.70bn of multilateral debt, and $4.24bn contracted by the Reserve Bank of Zimbabwe, the country’s central bank. Bilateral and multilateral debt accounted for $8.59bn, with arrears of principal and interest, including penalties, amounting to $6.68bn as of December last year, as per the report.
