(Bloomberg) -- The International Monetary Fund said the new Zimbabwean government has pledged that it will address an economic crisis to unlock international aid.
An IMF mission just concluded its first visit this week to the southern African nation since the removal of former President Robert Mugabe to assess the struggling economy, fund spokesman William Murray said at a briefing in Washington on Thursday. The government's unsustainable fiscal deficit and “severe” liquidity shortages, which fuel inflation, are hobbling the economy, he said.
Read more about the challenge of rebuilding Zimbabwe's economy
The removal last month of Mugabe, who ruled the country since independence in 1980, has raised some hope of a rebound for the economy.
New President Emmerson Mnangagwa faces the challenges of reviving a farming industry that collapsed following Mugabe-sanctioned land seizures of mostly white-owned commercial farms since 2000. He will also need to unlock investment in mining by clarifying so-called indigenization laws that force companies to sell or transfer 51 percent stakes to black Zimbabweans and re-establish international credit lines.
Zimbabwe will need “better targeting of the expensive agricultural support programs” and structural reforms that will improve the business climate to get the economy back on track, said Murray.
The country will also need to get foreign assistance, but a financial program with the IMF will only be possible if Zimbabwe clears its arrears with international institutions -- such as the fund's sister organization the World Bank -- and other creditors, he said.
To contact the reporters on this story: Andrew Mayeda in Washington at amayeda@bloomberg.net, Sarah McGregor in Washington at smcgregor5@bloomberg.net.
To contact the editors responsible for this story: Brendan Murray at brmurray@bloomberg.net, Rene Vollgraaff, Andre Janse van Vuuren
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