Zimbabwe Growth to Weaken Amid ‘Difficult’ Prospects, IMF Says

Zimbabwe’s growth is set to weaken as the southern African nation’s economic prospects remain “difficult,” according to the International Monetary Fund.

The government needs to cut spending on salaries and restore confidence in its financial industry, Domenico Fanizza, head of the IMF’s Staff Monitored Program for Zimbabwe, told reporters in the capital, Harare, on Monday. The country is making “token payments” of $150,000 a month in a bid to clear the $125 million it owes the Washington-based lender, he said.

“The top priority is to move resources from a too-high wage bill to much-needed capital and social spending,” Fanizza said. “The authorities intend to work toward reducing the share of revenues absorbed by the wage bill.”

Zimbabwe’s economy has struggled to recover after shrinking about 40 percent between 2000 and 2009 when the government evicted most of the country’s 3,500 white commercial farmers as part of a program to distribute land to black Zimbabweans. Growth will probably be 3.2 percent this year, little changed from 2014, with deflation persisting, central bank Governor John Mangudya said on Feb. 11. Fanizza didn’t give growth targets.

“We are continuously clarifying our indigenization policy,” Finance Minister Patrick Chinamasa said Monday at the event with Fanizza. Zimbabwe plans to start clearing arrears by the first quarter of 2016, he said. “Until we clear our arrears we are not in a situation were we can engage with our creditors for new money.”

Zimbabwe is also “mobilizing resources to accelerate compensation to the former farmers,” Chinamasa said. “This is a matter that we have to grapple with.”

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