IMF cuts Zim’s growth forecast

HARARE — THE  International Monetary Fund (IMF) has lowered Zimbabwe’s 2015 growth forecast to 1.5 percent from the initial 2.8 percent due to drought and low prices for commodity exports.
The visiting IMF assistant director and head of mission Domenico Fanizza told journalists Wednesday that the “cautious” projection was in light of the slowdown in the economy.
“We agreed on maintaining the 1.5 percent which seems to be quite cautious and safe assumption.
“There has been a slowdown in economic activity, there has been drought which has weighed significantly on economic activity and more over the international environment is becoming difficult with low prices for Zimbabwe exports and those are the main reason for the revision downwards,” Fanizza said.
The IMF projection is in line with projections made by Finance Minister Patrick Chinamasa in July when he revised downwards the country’s growth forecast to 1.5 percent from the initial 3.2 percent, citing low agricultural production.
Fanizza was leading an IMF team which conducted the second review of a two-year Staff Monitored Program (SMP) under which Zimbabwe has committed to implementing quantitative and structural economic reforms to strengthen its external position and lay the groundwork for clearance of its nine billion U.S. dollars external debt.
Zimbabwe managed to meet its SMP targets for the six-months to June although challenges still remained in the economy, Fanizza said.
Chinamasa, meanwhile, said Zimbabwe had come up with several options to clear its 1.8 billion dollars debt arrears to the IMF, World Bank and African Development Bank which it would present to creditors during a meeting in Peru next month.
He said prior to the Lima meeting, Zimbabwe will send a team of officials led by Reserve Bank of Zimbabwe Governor John Mangudya to Paris, Belgium and Brussels to sensitize the creditors on the economic situation obtaining in Zimbabwe.
“The end game of all this engagement is to clear the arrears with the multilateral institutions first and that will give us a stepping stone to engage the Paris Club creditors,” he said.
The huge external debt has affected Zimbabwe’s capacity to attract capital from the international market to rebuild the faltering economy. – ANA