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IMF Urges Zimbabwe to Trim Public Payroll, Limit Wage Increases to Curb Inflation


The International Monetary Fund urged Harare to implement robust economic policies to achieve a growth turnaround, and to improve its reporting of economic data to help it chart and correct its course

The International Monetary Fund has warned Zimbabwe to restrain demands from state and private sector workers for higher wages and weed out ghost workers on government payrolls to hold down public spending and avoid sparking another inflationary spike, following Article IV consultations with Harare officials that ended June 10.

IMF officials also urged the government to adopt further economic reforms and to improve the reporting of economic statistics. The IMF warning follows a rise in consumer inflation to 6.1 percent in May from 4.8 percent in April.

Though such levels are far from the hyperinflation seen in 2007 and 2008, they are significant in an economy in which the mixed hard-currency regime of U.S. dollars and South African rand once helped anchor prices.

IMF Mission Chief Vitaliy Kramarenko commented in a statement that “against the background of a recent pick-up in inflation and rising concerns about competitiveness, wage restraint is needed in both the private and public sector."

The lender of last resort urged Harare to implement robust economic policies to achieve a turnaround, and to improve its reporting of economic data to help it chart and correct its course.

"Improving the timeliness and quality of data reporting and making further progress in economic policies would help to move toward a staff monitored program, which is the stepping stone to an IMF financial arrangement and debt relief," the statement said. Under such a program IMF staff would directly observe policy formation and implementation, which some in Harare object to as an erosion of sovereignty.

But institution of a staff monitored program would improve Zimbabwe's chances of obtaining debt relief. The country has debt arrears of $1.3 billion to the IMF, the African Development Bank and the World Bank.

Economist Godfrey Kanyenze of the Labor and Economic Development Research Institute, an arm of the Zimbabwe Congress of Trade Unions, told VOA Studio 7 reporter Blessing Zulu that workers must heed the IMF warning because wage pressures fueling inflation could lead to job losses as companies retrench.

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