Zimbabwe needs immediate economic reforms, warns IMF


People queue to draw money outside a bank in Harare, Zimbabwe, 15 November 2017Image copyright
Reuters

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Incoming new leader Emmerson Mnangagwa has promised “jobs, jobs, jobs” but analysts say rescuing Zimbabwe’s economy is a huge challenge

Zimbabwe must act quickly to dig its economy out of a hole and access international financial aid, the International Monetary Fund has warned.

Government spending and foreign debt are too high and it needs structural reform, Zimbabwe mission chief Gene Leon told Reuters news agency.

The country’s incoming leader Emmerson Mnangagwa has pledged to grow the economy and provide “jobs, jobs, jobs”.

The once-thriving economy is now seen as a regional basket case.

“The economic situation in Zimbabwe remains very difficult,” Mr Leon told Reuters.

He said high government spending should be reined in and Zimbabwe should address the large international debt it has defaulted on.

“Immediate action is critical to reduce the deficit to a sustainable level, accelerate structural reforms, and re-engage with the international community to access much needed financial support,” Mr Leon said.

Robert Mugabe, who led Zimbabwe for 37 years, stepped down earlier this week under pressure from the military and his own Zanu-PF party.

His policies, including disastrous land reforms and printing too much money, are blamed for the calamitous state of Zimbabwe’s economy.

The economy is half the size it was at the turn of the millennium.

Zimbabwe has not had a currency of its own since 2009, when the old Zimbabwean dollar buckled under hyperinflation – which is said to have reached 231 million per cent – worse even than the notorious levels in Germany following World War One.

Cash shortages mean Zimbabweans can often be seen queuing at banks. Economists say Zimbabwe needs a cash injection, but it has been barred from borrowing internationally since it began defaulting on its debt in 1999.



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