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IMF to Zimbabwe: enhance coordination, cooperation within ministries

By Almot Maqolo

The International Monetary Fund (IMF) says Zimbabwe needs to enhance coordination and cooperation across ministries when it comes to sharing of financial information for all public sector entities as defined in the Public Finance Management Act (2009) (PFMA).

As part of IMF’s five-year project of the Enhanced Data Dissemination Initiative (EDDI) 2 Government Finance Statistics (GFS) Module on improving GFS and public-sector debt statistics in selected African countries, a mission was conducted in Zimbabwe during April 15–26, 2019. It was a follow up on a 2018 GFS technical assistance (TA) mission under the EDDI 2.

“At present, cooperation with the Accountant General’s (AG) office in the Ministry of Finance and Economic Development (MoFED) from several ministries is extremely limited leading to a lack of financial accountability for local authorities, extrabudgetary units (EBUs), and state owned enterprises SOEs,” said IMF in its latest GFS technical assistance report.

IMF said the MoFED needs to formulate, and enforce, clear punishment mechanisms for lack of compliance with the laws of Zimbabwe which govern GFS, mainly the PFMA and the Public Debt Management Act (2015) (PDMA). “At present, there is a severe, and persistent, lack of compliance with reporting requirements laid out in the PFMA and PDMA. Part of this problem is rooted in weak enforcement mechanisms which allow public entities to continually operate with very little accountability,” it said.

The AG’s office, IMF said, needs to expand their compilation of financial statistics to include all extrabudgetary funds, local authorities, and SOEs using a standardized Government Finance Statistics Manual (GFSM) 2014 format. In the short term, this can be done by converting existing data into a GFSM 2014<br>presentation. In the medium term, all entities will be required to report using a GFSM 2014 compatible template or the new chart of accounts.

“More detailed statistics would need to be compiled to reflect all subsidies provided by government to public corporations,” IMF stated. “At present, budgetary central government outturn data broadly classifies these as capital transfers which does not allow for a clear understanding of the extent to which subsidies are being provided and to whom they are being provided.”

The Fund said authorities across all ministries and public entities need to formulate, and publish, an updated list of all public sector entities including EBUs, local authorities, and SOEs. The mission worked to prepare a preliminary list containing 210 EBUs, 92 local authorities and 105 SOEs. While they are currently being validated across departments, IMF said, should be published by all relevant government agencies.

“All of these recommendations will require greater communication and cooperation between MoFED, the Ministry of Local Government, Public Works and National Housing (MoLG) and other relevant ministries, along with the building and implementation of a standardized reporting template which fits into the new Chart of Accounts (COA) framework,” IMF said.

IMF added that: “The benefits of implementing these recommendations would include a greatly improved ability to assess the health, solvency and potential risks of the public sector through balance sheet exposure.” The mission’s objective was to review progress made and assisting with outstanding statistical issues that are important for sound policymaking in Zimbabwe.

However, some of the key outstanding issues raised by the IMF African Department prior to the mission were, the classification of government subsidies to SOEs; the identification of EBUs and classification of their operations; and the correct classification of other government transactions in line with a GFSM 2014 framework.

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