Does Zimbabwe need another Staff Monitored Programme?

Mazvita Samuriwo

According to the International Monetary Fund (IMF), a Staff Monitored Programme (SMP) is an informal arrangement between the Zimbabwean government and the IMF to monitor the implementation of economic programmes in the country, with the aim of bolstering economic growth policies, restoring economic stability and accommodating spending to alleviate food insecurity and protect vulnerable groups.

Zimbabwe adopted the IMF’s SMP programme for one fiscal year from May 2019 to March 2020. The aim of the SMP was to maintain close and continuous dialogue on economic policies to restore economic stability. This programme collapsed in March due to what Zimbabwe’s finance Minister called “recalibration” caused by twin disasters namely Cyclone Idai, Cyclone Nero and the Covid-19 pandemic.

In determining whether Zimbabwe needs another SMP, Zimbabwe’s Minister of Finance and Economic Development Professor Mthuli Ncube placed primary emphasis on using policies from Zimbabwe as a starting point.

Minister Ncube further conceded that Zimbabwe should use home policies with guidance stemming from international best practices. It is believed that this will place the economy on a long-term, sustained inclusive growth path.

At a press briefing on the 5th of October 2020 entitled “Progress on Economic reforms under the TSP”, Minister Ncube said under the recently lapsed SMP the Zimbabwe Government actually over-performed, with only one indicator out of 15 being missed. This is contrary to the views expressed by the IMF in its 2020 Article IV Consultation document, which said Zimbabwe failed to meet set targets prescribed in the programme.

Zimbabwe’s Finance Minister did not expressly say he would not consider another new SMP but he did pose the question: Why should Zimbabwe enter another Staff Monitored Programme?

The effect of external disasters such as the El Niño drought and Cyclone Idai were detrimental particularly for the provision and production of electricity and agriculture. The cumulative effect of these factors had the effect of complicating an already difficult economic outlook while the economy adjusted to a new SMP.

“We are also working closely with development partners, including the IMF, WB (World Bank), AfDB (African Development Bank), amongst others, for the provision of technical assistance and guidance on international best practices which enable us to come up with the optimal policy mix for the country,” Professor Ncube said.

It is believed that strong policies are needed to sustain economic recovery, restore fiscal and external sustainability, and increase financial stability.