Zimbabwe needs better policy coordination and must mend relations with international lenders to support its “necessary reforms”, a team of visiting African Development Bank executives says.
A seven-member delegation of Executive Directors of the AfDB has been in Zimbabwe on a week-long fact-finding mission, which included a meeting with President Emmerson Mnangagwa.
“The directors noted that despite some positive results, reform coordination in the country remains a challenge, against a backdrop of a continuing general rise in poverty levels, especially in the urban areas,” the delegation said in a statement Wednesday.
According to the statement, Mnangagwa, in his meeting with the executives, said: “We need more assistance as a country, more so, as we embarked on substantive economic reforms based only on domestic resources without help from the international community”.
The AfDB delegation said Zimbabwe must restore its relations with foreign lenders in order to access the capital it needs.
“The group urged perseverance in the implementation of reforms and called for early normalisation of relations with development partners, which would help unlock more substantive external resources for Zimbabwe, including from the African Development Bank.”
Zimbabwe is unable to take on fresh loans from multilateral lenders due to arrears. Foreign debt stood at US$8 billion as at September 2019, according to Treasury data. Zimbabwe has cleared its arrears with the IMF, but last year owed US$687 million to the AfDB, US$1.4 billion to the World Bank and US$322 million to the European Investment Bank.
In 2018, Finance Minister Mthuli Ncube announced plan to restructure debt repayments, but a rule that requires that all priority lenders be paid simultaneously have delayed his efforts.
The AfDB team said in its meeting with Mnangagwa, it “welcomed the President’s pledge to recalibrate the (Transitional Stabilisation) Program, which aims to implement a coherent set of policies that facilitate a return to macroeconomic stability”.
Corrective measures
Zimbabwe’s reforms, the executives said, “include introducing necessary policy and institutional reforms for private sector-led growth, addressing infrastructure gaps, and launching quick-wins to stimulate and restore growth”.
The Bank has previously noted Zimbabwe’s narrowing of the budget deficit from 9.9% of GDP in 2017 to 5.6% in 2018 and 6% in 2019. However, the AfDB delegation says the impact of drought is likely to wear down the economy in 2020.
AfDB’s Africa outlook report for 2020 said the Zimbabwe economy shrunk by 12.9% in 2019. It forecast a recovery of 4.6% in 2020 and 5.6% in 2021, but only “if corrective measures are taken, especially to restore macroeconomic stability”.
The executives visited Chimanimani, where the AfDB is spending US$24.7 million on reconstructing public infrastructure damaged by Cyclone Idai in 2019.
