Improve debt management: IMF

THE executive board of the International Monetary Fund (IMF) has underscored the need for Zimbabwe to improve its debt management strategy and to opt for grants instead of loans.

Zimbabwe owes its creditors such as the IMF, World Bank, Paris Club among others something in the region of US$10 billion including arrears

In their assessment for the 2014 Article IV Consultation with Zimbabwe, IMF directors said an arrears clearance supported by partners was important.

“Directors expressed concern that Zimbabwe’s external position remains precarious. They welcomed the authorities’ commitment to rebuild external buffers. They underscored the need to improve debt management and supported the strategy to seek mainly grants and highly concessional resources, while limiting non-concessional financing to critical development projects with high economic returns.

“They noted that strong macroeconomic policies and a comprehensive arrears clearance framework supported by development partners are essential to addressing Zimbabwe’s debt problems. They encouraged the authorities to engage in coordinated discussions with the World Bank and other international financial institutions (IFIs) and called on them to respect the preferred creditor status of IFIs, avoid selective debt service, and increase payments to the Fund’s Poverty Reduction and Growth Trust as capacity to repay improves,” reads the Assessment report.

The IMF also said enhancing financial sector stability remains a priority and recommended continued vigilance in monitoring weak banks and a proactive approach to ensure an orderly resolution of insolvent non-systematic banks.

Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the executive board.

At the conclusion of the discussion, the managing director, as chairman of the board, summarizes the views of executive directors, and this summary is transmitted to the country's authorities.-