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FILE: A man in Harare holds bondnotes issued by Reserve Bank of Zimbabwe, Oct. 15, 2018. The introduction of bond notes - a currency Zimbabwe started printing two years ago to ease the situation -- has not helped. (C.Mavhunga/VOA)

MacDonald Dzirutwe

* Mnangagwa under pressure to deliver change

* Wants to unlock lending from G7 countries

* IMF criticises economic, political progress

By MacDonald Dzirutwe

HARARE, Sept 26 (Reuters) - The International Monetary Fund said on Thursday that Zimbabwe needed to intensify reform efforts and meaningfully improve transparency, as the government faces growing criticism over its commitment to delivering economic and political change.

The warning came the same day that the Financial Times reported that the IMF had privately warned Zimbabwe that state payouts to local company Sakunda Holdings were undermining trust in the economy.

President Emmerson Mnangagwa’s opponents say the government is reverting to the authoritarian tendencies seen under former leader Robert Mugabe, who died early this month, by clamping on dissent. They also criticise Mnangagwa for presiding over soaring prices and shortages of foreign currency and fuel that have sparked anger among a restive population.

Mnangagwa and senior officials say they are doing their best to lay the foundations for future growth and blame Western sanctions for hampering recovery and deterring investment.

“Policy actions are urgently needed to tackle the root causes of economic instability and enable private-sector led growth,” the IMF said in a statement, after visiting Harare this month to review progress on a staff-monitored programme.

The programme doesn’t involve IMF loans, but the Zimbabwean government hopes it can help unlock future lending from countries in the G7 group of world powers.

The IMF added: “The key challenge is to contain fiscal spending consistent with non-inflationary financing and tighten monetary policy to stabilise the exchange rate and start rebuilding confidence in the national currency.”

The FT report said payouts to Sakunda, a fuel company owned by an ally of Mnangagwa, were equivalent to the central bank printing money.

A source with knowledge of the Sakunda transactions told Reuters the IMF had raised a red flag over the central bank’s preferential treatment of $366 million of Treasury bills issued to Sakunda in January.

Zimbabwe, which adopted the U.S. dollar as legal tender in 2009, launched a transitional currency in February and converted all its domestic foreign-currency debt to local currency at a ratio of 1:1. But Sakunda’s bills remained denominated in U.S. dollars, the source added.

Sakunda then redeemed $330 million of the bills in July and was paid more than 3 billion Zimbabwe dollars by the central bank, according to the source.

Last week, the company used some of the money to buy dollars on the black market, devaluing the local currency by 23%, said the source and two currency traders. The central bank ordered banks to freeze the accounts of the company and three other businesses, according to a letter seen by Reuters.

A parliamentary audit committee is currently investigating Sakunda’s involvement in agriculture financing.

Calls and messages to Reserve Bank Governor John Mangudya’s mobile phone went unanswered on Thursday, while Sakunda chief operating officer Mberikwazvo Chitambo did not respond to emailed questions and phone messages.

George Guvamatanga, permanent secretary at the ministry of finance and economic development, said the FT report and the comments by the source were without merit. He said: “These reports circulating are unfounded and malicious.” (Additional reporting by Alexander Winning; Editing by Alison Williams and Andrea Ricci)

FILE: Zimbabwe riot police sit outside the hospital in Harare, Sept. 25, 2019, where the head of the Zimbabwe Hospital Doctors Association Dr. Peter Magombeyi is currently receiving medical care

HARARE (Reuters) - Zimbabwe’s political and economic environment is deteriorating, causing anxiety as hopes fade for a long-awaited improvement in people’s living conditions, a United Nations human rights envoy said on Friday.

Many Zimbabweans are frustrated that the departure in November 2017 of longtime ruler Robert Mugabe, who died on Sept. 6 in Singapore, did not lead to a quick economic recovery and end to heavy-handed tactics by authorities.

The International Monetary Fund said on Thursday Harare needed to intensify reform efforts.

Clement Nyaletsossi Voule, a U.N. envoy on the rights to freedom of peaceful assembly and of association, told reporters after a 10-day fact-finding visit that Zimbabweans were questioning the capacity of President Emmerson Mnangagwa’s government to bring about change.

“Albeit the common belief that a transformation will come, I believe that the long-awaited hopes are fading,” Nyaletsossi said.

“I have perceived from my different meetings around the country that there is a serious deterioration of the political, economic and social environment since August 2018, resulting in fear, frustration and anxiety among a large number of Zimbabweans.”

Nick Mangwana, the information ministry’s permanent secretary and principal spokesman, could not be reached for comment on Friday.

Mnangagwa’s disputed election win last year was met by a security crackdown that killed six people, while more than a dozen people died in January when security forces moved in to quell fuel protests that had turned violent.

The government arrested scores of civil society and opposition officials after the January protests and charged them with subversion, which carries a 20-year jail term.

Nyaletsossi said Harare authorities should withdraw the charges against civil society leaders to build trust between government and non-governmental organisations as well as stop surveillance of the groups by state security agents.

Nyaletsossi, who will present his report at the United Nations Human Rights Council meeting next year in June, also urged Mnangagwa’s government to amend security laws to allow peaceful protests and remove a blanket ban on demonstrations.

Last month, the police and courts banned the main opposition party from holding countrywide protests over Mnangagwa’s handling of the economy, saying the demonstrations posed a security threat. (Reporting by MacDonald Dzirutwe)

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