The International Monetary Fund (IMF) has said that Zimbabwe was experiencing hardships which are expected to result in further contraction of the economy in 2019. This was revealed by IMF Zimbabwe representative, Patrick Imam, during an in-depth interview with The Herald Business. Below are excerpts from the interview.
HB: How does the IMF assess the economic environment since the arrival of the new government?
P Imam: Look, the country is obviously in a difficult position and we expect a contraction in 2019. Part of it is driven by an exogenous shock which is beyond the government’s control. Think for instance about Cyclone Idai and the drought. These natural disasters will lead to a contraction in the agricultural sector for instance, and also impact electricity generation. Erratic electricity supply is also expected to continue to have a distressing impact on producers and consumers across sectors. Some critics claim that the government should have better prepared for the impact of the drought, but hindsight is always 20/20.
In addition, there was, and this was anticipated, the contraction arising from the belt-tightening induced adjustment. The fiscal adjustment was always going to take purchasing power out of the economy. On the currency front, some hesitations may have created a temporary lack of confidence in the market, which didn’t encourage the private sector to invest. But over the past month, we have achieved some stability on that front as well.
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