IMF says Zimbabwe's economy is "fragile", urges reforms

Mon Jun 23, 2014 4:08pm GMT

* IMF sees 3.1 pct growth, half of government's forecast

* Government has said it not ready to cut public wage bill

* Zimbabwe has only two weeks import cover in reserves

By MacDonald Dzirutwe

HARARE, June 23 (Reuters) - Zimbabwe's economy remains fragile and the government should undertake comprehensive reforms, including reducing the public sector wage bill and mobilising revenues from diamond mining, the Internatonal Monetary Fund said on Monday.

The southern African country has since last year been on an IMF monitoring programme aimed at helping it clear $10 billion in external debts, which would give it access to much-needed international credit.

"Executive Directors noted Zimbabwe's fragile economic situation characterized by a growth slowdown, a large external deficit, and low international reserves," the IMF said in a statement following a visit to Zimbabwe early this month.

The IMF projected economic growth this year of 3.1 percent, lower than the government's forecast of 6.1 percent, on the back of large mining companies reaching full production capacity.

But Zimbabwe only had external reserves covering less than two weeks of imports and required strong macroeconomic and financial policies, an enabling business environment, and normalized relations with creditors, the IMF said.   Continued...

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