IMF Tells Zimbabwe “Bold Economic Reforms” Needed

The International Monetary Fund (IMF) has weighed in on the deepening economic crisis in Zimbabwe. The African nation, already one of the poorest countries in the world, has been plagued by drought, suffered from deflation, and struggled with falling commodity prices around the world. Given the nature of Zimbabwe’s economic output, the IMF fears there is very little relief in sight for the African nation, according to a report it released on Wednesday.

The International Monetary Fund (IMF) has weighed in on the deepening economic crisis in Zimbabwe. The African nation, already one of the poorest countries in the world, has been plagued by drought, suffered from deflation, and struggled with falling commodity prices around the world. Given the nature of Zimbabwe’s economic output, the IMF fears there is very little relief in sight for the African nation, according to a report it released on Wednesday.

Nine-two year old Zimbabwean President Robert Mugabe has been in power for almost 40 years. Not surprisingly, this has led to a very consistent political landscape, but a lack of innovation or fresh thinking in the government.

“Unless the country takes bold reforms, the economic difficulties will continue in [the] medium term,” according to IMF analysts. The IMF has been engaged in consultations with Zimbabwean officials, trying to help devise strategies to improve the nation’s dire economic climate. “Given the outlook for the global economy, growth is projected to remain below levels needed to ensure sustainable development and poverty reduction.”

Early this decade, Zimbabwe experienced a small growth spurt. Real gross domestic product (GDP) grew by 10.6% in 2012. Many believed this could usher in a strengthening of the Zimbabwean economy. The economic uptick, however, stalled recently thanks to difficult environmental and global economic conditions. Last year growth amounted to a mere 1.1%.

Analysts blamed drought and “erratic” rains as the biggest sources for the economic downturn. Moreover, Electrical supply disruptions, also caused in large part by the drought, affected other areas of the economy reliant on electrically powered technology.

For its part, Zimbabwe has been attempting to implement some IMF reforms, albeit slowly. IMF officials confirmed that Harare has satisfied most of the recent reform commitments the IMF required in order to get its finances in order. The reforms, designed to repair the nation’s finances, would clear the way for the IMF to begin underwriting future growth initiatives. The IMF also noted, however, that a “step-up to a comprehensive and deep economic policy adjustment agenda will be critical to address Zimbabwe’s daunting economic challenges.”

The IMF is famously the state-level financier of nations in some of the most desperate situations. Unfortunately, Zimbabwe’s economy is so small and its output so limited that it would have significant trouble repaying any loans it might take from the IMF absent significant reforms and modernization.