1. 1
Building resilience
Christian Beddies, IMF Resident Representative
Zimbabwe Economic Review
Conference
October 20, 2016
Harare

2. Roadmap
• Zimbabwe’s economic situation
• External shocks
• Building resilience
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3. Projected growth paths...
3.4
6.1 6.4 6.5
7.9
4.5
3.8
1.1
-0.3
-2.5
4.5
3.8
1.1 1.2
4.8
2013 2014 2015 2016 2017
GROWTH RATES
ZIMASSET VS ACTUAL
Zimasset growth figures IMF estimates Authorities estimates

4. Credit to private sector
4
-20
-10
0
10
20
30
40
50
60
70
Y-o-Y change

5. 550
570
590
610
630
650
670
690
710
730
750
Jan2014
Jul2014
Jan2015
Jul2015
Jan2016
Total electricity consumption
(GWh)

6. Declining volume of fuel sales
(Index: June 2014=100)
6
60
70
80
90
100
110
120
Jun2014
Aug2014
Oct2014
Dec2014
Feb2015
Apr2015
Jun2015
Aug2015
Oct2015
Dec2015
Feb2016
Apr2016
Jun2016
Aug2016
Oct2016

7. 7
Status quo
Budget Deficit
Fragile
financial
sector
Private
Sector
Contraction
Social cost
Inflation
pressures

8. External shocks...
• Fluctuating commodity prices
– Zimbabwe's key commodity exports are gold, platinum,
nickel
• Global growth slowdown leading to falling demand
• Lower economic activity in migrant host countries
affecting inflows of remittances and export
earnings
• Exchange rate movements affecting inflows of
remittances and export earnings

9. Major Export Prices
(y/y percent change)
-60
-40
-20
0
20
40
60
80
100
120
140
160
Tobacco ($) Diamonds (index) Nickel Gold

10. 3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
2010
2011
2012
2013
2014
2015
2016
Proj.
Average Real GDP Growth of Top 5 Export Partners
(percent change)

11. What makes the situation more fragile
11

12. Domestic factors in Zimbabwe
• Policy inconsistency in a difficult political
environment
• Widening fiscal gap threatening private
sector-led growth
• Low productivity
• Institutional issues
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13. Building resilience
• Fight the “fragility trap”
– Build resilience through creating a competitive market-based
economy
– Reach a common vision - adoption of policies and reforms
that promote socioeconomic stability and enjoy broad-based
ownership
– Fully implement the constitution
• Build state capacity
• Strengthen institutions and institutional arrangements
• Strengthen governance
– Produce - value addition, strong and private sector-led growth
– Build buffers - fiscal buffers, reserves
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14. The re-engagement process a recap
Steps in arrears clearance
• 1st Step - clear arrears to IFIs (AfDB, IMF and WB)
• 2nd Step - Design an economic programme that
addresses the deep rooted structural issues and can
be supported by the IFIs
• 3rd Step – need for financing assurances from IFIs
and bilaterals to ensure the projected financing gaps
can be closed
Lima is work in progress
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15. Key tenets of an economic program
• Recall the May 2016 Article IV report:
Fiscal discipline and rebalancing expenditure away from
employment costs toward development and social
spending to restore fiscal sustainability
Enhancing financial stability and depth -> savings
mobilization and investment and contribute to economic
development
Tackling the external arrears and advancing the
reengagement process to allow the country to eventually
access external financing
Addressing structural weaknesses to boost Zimbabwe’s
growth potential
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16. Useful links
• General IMF websites:
www.imf.org and www.imf.org/zwe (our local
website)
• Debt sustainability
 http://www.imf.org/dsa
• Paris Club
 http://www.clubdeparis.org/en/
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17. Thank you!
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