International Monetary Fund (IMF) pointed the growing fiscal deficit in Zimbabwe as the problem of Zimbabwe’s economic woes during a regular press briefing in Washington, United States of America USA last week. William Murray from the communications department was reiterating on IMF’s advice to Zimbabwe on challenges in the country.
“As we noted, and we have been noting, the Zimbabwean economy faces severe challenges. An unsustainable fiscal deficit has led to severe liquidity shortages, created inflationary pressures, and threaten the viability of the financial sector and Zimbabwe’s exchange rate regime,” said Murray.
“Restoring growth will require concerted efforts to tackle the fiscal deficit including through rationalizing and better targeting the expense of agricultural support programs.”
IMF’s position seems to be in agreement with presenters on a Confederation of Zimbabwe Industries (CZI) symposium who also believe that fiscal deficit is a problem in the country. A presenter during the symposium said that fiscal deficit is the elephant in the room, which could make 2018 another hard year for Zimbabwe’s economy. CZI Vice President, Henry Ruzvidzo who predicted a tough 2018 on Zimbabwe’s economy said that things militating the country are a fiscal deficit and loss-making parastatals. Zimbabwe’s projected deficit for 2018 is US$627 million which translate to about 4,5 percent of the country’s Gross Domestic Product.
Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Mangudya responding to the issue of fiscal deficit said that Zimbabwe is not the only country with a deficit. The RBZ Governor said even USA and Zambia have fiscal deficits in their economy.
“The problem is not about the deficit itself… it’s about financing the deficit,” said Mangudya.
Dr Mangudya said that Zimbabwe, unlike other countries, did not have access to the international lenders to finance the deficit because it was under sanctions.
“The IMF stands ready to support the authorities and their efforts to address these challenges. But as we noted, in addition to a strong coherent reform program, a concerted international effort will be required to revive and reintegrate the Zimbabwean economy,” said Murray.
“The authorities are cognizant of these challenges that they face and the economy is facing and they’ve expressed their determination to address them.”