The IMF has reported that the measures that Zimbabwe has agreed to take during the IMF Staff-Monitored Programme will result in the economy shrinking before rising. Zimbabwe agreed not to borrow externally and to cut reliance on the central bank to finance deficits during an IMF staff-monitored programme.
In its recent report released on Friday, the IMF said Harare authorities pledged to borrow $400 million from the central bank in 2019, down from $3 billion last year. Moreover, the treasury will also cut the Government’s salary bill to 67% of the budget, down from 79% last year.
These and other measures including the removal of grain subsidies and subsidy on fuel is expected to shrink the by 2,1% this year before rebounding to 3,3% growth in 2020. The IMF also projects the inflation rate to average 80,86% this year before falling to 14,1% next year. Part of the report reads:
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Higher than projected inflation or a continued exchange rate depreciation could increase spending pressures, while failure to enforce (performance finance management) could lead to unbudgeted expenditure.
More: The Herald