The International Monetary Fund (IMF) on Tuesday urged Zimbabwe to institute sharp cuts in public spending to prevent a further unravelling of its economy after wrapping up a two-week assessment.
”Going forward, the key will be first to ensure that sharp cuts are made in real terms in fiscal spending, including quasi-fiscal activity previously undertaken by the Reserve Bank of Zimbabwe,” the global lender said in a statement.
The IMF called for a battery of policies to halt the country’s economic crisis, warning that Zimbabwe’s economy could further deteriorate if President Robert Mugabe’s government did not change tack.
”Zimbabwe’s economic crisis calls for the urgent implementation of a comprehensive package comprising mutually reinforcing actions,” it said.
”Without a fundamental change in policies, prospects are for a continued deterioration in the economic situation.
”A crucial element of this package will be strong fiscal adjustment.”
The IMF team arrived in Harare on December 3 to assess Zimbabwe’s economic health ahead of the global lender’s meeting early next year in which it is expected to decide on whether to keep Zimbabwe in its fold.
Zimbabwe, which narrowly averted expulsion from the IMF last September for debt arrears of $295-million through a surprise payment of $120-million, still owes the IMF $125-million.
The former British colony is in the throes of economic crisis characterised by world-record inflation, 70%-plus unemployment and chronic shortages of basic goods like fuel and the staple corn meal. — Sapa-AFP