An International Monetary Fund team that was in Zimbabwe for 12 days through Saturday has urged Harare to cut public spending, including central bank printing of money to fund the operations of the government and state-owned companies.
The IMF warned that the economic crisis could get worse if the government did not quickly undertake economic reforms, especially reducing budget overruns.
The assessment team offered a bleak economic projection for 2007: a contraction of 4.7% compared with the 0.5%-1% growth the government has predicted.
The Fund advised the government to set priorities for spending beginning with food imports, treating and caring for those afflicted with HIV/AIDS and helping people displaced by Harare's eviction-demolition campaign of May-July 2005.
The IMF team was in town for so-called Article IV consultations on the economy and Harare's macroeconomic policies. It noted that inflation has been climbing while the country has faced chronic shortages of basic goods, fuel and farming inputs.
Deputy Finance Minister David Chapfika told state media that Harare welcomed the IMF report and is already implementing some of its recommendations.
The mission’s full report will go to the IMF executive board which in February will look at Zimbabwe’s member status in light of outstanding arrears of US$127 million on its debt to the Fund, and its failure to heed IMF policy prescriptions.
Economist James Jowa told reporter Blessing Zulu of VOA’s Studio 7 for Zimbabwe that the consequences will be dire if spending is not brought under control.