Zimbabwe Coalition on Debt and Development (ZIMCODD) says for the country to regain lost confidence with the international community, it needs to improve its pace on implementing agreed political and economic reforms.
The southern African nation has been pushing a re-engagement agenda in which it is calling for the total lifting of the embargo slapped on Zimbabwe two decades ago, and is blamed for fuelling the country’s economic challenges. Zimbabwe estimates the sanctions, imposed two decades ago to force the government to re-think its land reform policy, had cost the economy nearly US$100 billion.
In February this year, the southern African nation welcomed the easing of European Union (EU) sanctions on the country, but reiterated its call for the total scrapping of the penalties. Recently, two government owned banks were freed from illegal US sanctions after enduring the penalties for 12 years.
“The government must make a deliberate effort to speed up the reengagement with the international community,” ZIMCODD stated. Previously, the International Monetary Fund (IMF) admitted that the southern African nation’s debt will need to be restructured but says this cannot be done in the absence of the requisite political reforms.
Zimbabwe’s total debt stands at about US$16.8 billion. International Financial Institutions (IFIs) have demanded that it settles its arrears will all IFIs before it can borrow any new money. “This is important in the restoration of lost confidence and trust by the international community. This should be buttressed by religiously implementing the agreed political and economic reforms.”One of the essential reforms would be the alignment of laws with the country’s constitution.
IMF has been saying that policy actions are urgently needed to tackle the root cause of economic instability and enable private sector led growth, adding that the key challenge was to contain fiscal spending consistent with non-inflationary financing and tighten monetary policy to stabilize the exchange rate and start rebuilding the confidence in the regional currency.
Zimbabwe’s GDP is poised to contract by 7.4% from an initial projection of 0.8% growth in 2020, according to IMF’s Sub-Saharan Africa Regional Outlook. But, the southern African nation’s economy is set to rebound to a small growth of 2.5% in 2021.
Standard Chartered Bank, one of the country’s oldest financial institutions, said the prevailing headwinds can only be reduced if Zimbabwe reengages with key global financiers as well as a collective effort by all internal stakeholders to implement broad based market reforms to address political, social and economic issues.