IFC preparing investment programme for Zim as IMF okays SMP


Reserve Bank of Zimbabwe governor John Mangudya

  • Credit lines of up to $200 mln could be availed

The World Bank approved that management of the International Finance Corporation proceed to prepare a new investment programme for private sector projects in Zimbabwe.

The approval was granted in early February.

Reserve Bank of Zimbabwe governor John Mangudya told a press conference  that the approval was one of the success stories of the current re-engagement process.

“That’s a big success story for this economy because IFC are known for providing capital to the private sector and new lines of credit to banks. It is a success story for the country.”

He added that it will also add to the transformation agenda that the central bank was currently advocating for

A team from the IFC is currently in the country.

Information obtained by Finx shows that IFC was given three months (from February) to assess the situation and to consult on areas which need funding in the private sector with particular focus on agri-business.

They have so far identified five banks which could get credit lines of up to $200-$300 million.

IFC is a member of the World Bank Group and is the largest global development institution focused exclusively on the private sector in developing countries.

Meanwhile the International Monetary Fund has said that Zimbabwe has met all quantitative targets and structural benchmarks under the third and final review of the SMP. Moreover, they have started to develop a medium term economic transformation program, in line with the broader reform agenda presented at the Lima meetings on arrears clearance in October 2015.

However Domenico Fanizza the head of the IMF delegation said that particular attention should be given fiscal discipline and to monitor the risks that remain in the financial sector.

“Given the lack of resources, the authorities need to keep the cash primary accounts close to balance.
This heightens the urgency of re-engagement with the international community. The objective is to eventually unlock financing that could allow Zimbabwe to deal with adverse shocks and plan for much needed social and capital outlays.

“This will, however, not be sufficient. We support the authorities’ ambitious plan for shifting resources to much needed infrastructure investment and social outlays by reigning in employment costs.”

Fanizza said that although significant progress had been made in ethe financial sector risks remain.

“It will be important to continue with strong proactive supervision, further reduce nonperforming loans, and deliver on financial inclusion as outlined in the National Financial Inclusion Strategy to reinforce confidence and cement financial stability.”

He also added that improving the business environment is also key in particular the consistent and transparent implementation of the indigenisation policy.

“We are encouraged that the authorities plan to clear the outstanding arrears with International Financial Institutions (IFIs), as outlined at the Lima meetings. The successful resolution of Zimbabwe’s external payment arrears will be an important step toward normalizing relations with the international financial community and will allow the country to eventually seek a Fund financial arrangement.

“It will also send strong signals to the international community, reduce the perceived country risk premium, and unlock affordable financing for government and the private sector. This, together with policy reform, will help to achieve sustained economic development through economic transformation, to improve living conditions for the people of Zimbabwe, and to reduce poverty.

“It is envisaged that the Staff Report for the Article IV discussions and the third review under the SMP will be discussed by the IMF’s Executive Board in early May,” said Fanizza FinX

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