November 3, 2014
Ms Christine Lagarde,
International Monetary Fund
Washington, DC 20431
Dear Ms Lagarde,
THE first and second reviews of our Staff-Monitored Programme (SMP) were approved by Fund Management in June 2014. The SMP is Zimbabwe’s first programme engagement with IMF staff in more than a decade.
The SMP played a pivotal role in setting the stage for a more stable macroeconomic environment and for rebalancing gradually the economy toward fostering private sector-led growth.
Following delays in the initial implementation, related to the fact that 2013 was an election year, we succeeded in bringing the programme back on track.
Moreover, we have taken steps to strengthen the financial sector, and have made progress in increasing diamond revenue transparency.
As a result, we have met all quantitative targets and structural benchmarks for the third review. We are grateful to the IMF for its continued support of our economic reform programme and technical assistance.
The government has also stepped up its efforts to reach out to a broader set of stakeholders. In September 2014, we held a workshop with development partners, private sector representatives and NGOs to prioritise projects and programmes under our economic blueprint for the next five years, October 2013 to December 2018.
ZimAsset aims to achieve sustainable development and social equity, propelled by the country’s abundant human and natural resources.
As part of ZimAsset, we also intend to accelerate our re-engagement on debt resolution with all our creditors, including the international financial institutions. We also plan to host a second international debt resolution forum sometime in November 2014, to build consensus on the process for resolving Zimbabwe’s debt challenge.
Zimbabwe urgently requires a substantial amount of inflows of fresh capital to help the economy to recover. Against this background, we hereby request completion of the third review (now approved) and continued fund staff support under a successor 15-month SMP.
The new SMP (October 2014–December 2015) will provide a coherent macroeconomic framework that will support our efforts to maintain macroeconomic stability, promote inclusive growth, address weaknesses in the financial sector, improve the external position and lay the foundation to build our capacity to repay our outstanding debt.
We consider that a successor SMP will be instrumental in building on the achievements already made and tackling the economic challenges Zimbabwe faces. It will also, in our view, be an important step on the path toward normalizing relations with our creditors and the fund’s financial support.
The attached Memorandum of Economic and Financial Policies (MEFP) outlines our macroeconomic objectives for 2014-15 and provides specific measures to achieve them.
We are committed to the objectives of our programme recognising that completion of reviews under the SMP is subject to observance of quantitative targets and structural benchmarks. The government believes that the policies set out in the attached MEFP are adequate to achieve the objectives of the SMP, but stands ready to take additional measures.
Furthermore, the Government of Zimbabwe will consult with the IMF staff in advance of any revisions to the policies contained in the MEFP, in accordance with the IMF’s policies on such consultations, at the initiative of the government or the IMF staff.