IMF says Zimbabwe must act fast to shore up economy

Zimbabwe needs urgent reforms and fiscal belt-tightening as its moribund economy takes further knocks from low commodity prices and an ongoing drought, the International Monetary Fund warned Wednesday.

Zimbabwe has suffered an economic crisis since controversial land reforms were implemented in 2000, when farms were seized from white owners for redistribution, leading to a drastic fall in output in a country that was once Africa’s bread basket.

“Economic difficulties have deepened. Zimbabwe cannot wait and needs to act now,” IMF’s country representative Domenico Fanizza said in a statement.

“The El Nino-induced drought has hit the economy hard” compounded by lower commodity prices and a higher US dollar.

“Policy action is needed to reverse this trend,” he said.

Zimbabwe’s local dollar currency was scrapped in 2009 after hyperinflation peaked at around 500 billion percent, making it unusable.

“A comprehensive and ambitious economic transformation program is needed to revive the Zimbabwean economy and to cement support among international partners,” the IMF said.

The organisation praised Zimbabwe’s commitments to clear outstanding debts, but stressed the need for fiscal discipline.

Civil servants have repeatedly threatened the cash-strapped government with strikes over unpaid wages.

And just last month, long-ruling President Robert Mugabe sparked outrage when he racked up a $800,000 (725,000-euro) bill for his lavish 92nd birthday party.

“Fiscal discipline is the key priority. Given the lack of resources, the authorities need to keep the cash primary accounts close to balance,” said the Washington-based lender.

It also stressed the need for “consistent and transparent implementation” of Zimbabwe’s controversial indigenisation scheme, adopted in 2008, under which foreign companies must transfer 51 percent of their shares to local entities or individuals.

An estimated 13 million people have left Zimbabwe in the last 15 years, with the National Association of Non-Governmental Organizations putting the jobless rate at an estimated 95 percent.

Only about 700,000 of those remaining hold formal jobs, according to employer organisation and government figures.