Lima agreement stalls

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By Ndafadza Madanha

THE Lima agreement which was intended to resolve the country’s foreign debt and unlock fresh capital has stalled amid indications that government is failing to implement some provisions of the agreement.

Addressing the media on the sidelines of the launch of the Regional Economic Outlook in Harare, IMF Africa director Abebe Selassie said traction on the Lima agreement was dependent on implementation of key reforms.

“Lima depends on implementation of key issues we have raised and government has struggled to do so. The 2018 budget will be crucial in giving us indications on what is going to happen” said Selassie.

His sentiments were also echoed by the resident IMF representative Christian Beddies who said the Lima agreement was painfully slow as government had to pay creditors first to unlock fresh capital.

The government is also expected to draw up an economic transformation programe that will be approved by key International Financial Organizations before any fresh capital is released.

Government and IFOs agreed in Peru in 2015 on a roadmap for the country to settle its foreign debt estimated at close to US$8 billion.

Since appending its signature to the Lima agreement Zimbabwe has managed to pay the IMF US$110m from its SDR allocation.

The World Bank (WB) is owed US$1.1B, Africa Development Bank (ADB) US$600m, Paris Club US$1B amongst a host of other multilateral and bilateral creditors.

Meanwhile growth in Sub-Saharan Africa is expected to grow by 2.6 percent in 2017 buoyed by recovery in Nigerian oil production and easing drought conditions in eastern and southern Africa.

The report also cautioned governments on the rising public debt and urged sustainable fiscal expenditure.

Foreign exchange pressures have abated across the region however; Zimbabwe finds itself anchoring the table with the lowest foreign exchange cover.

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