Zimbabwe’s economic prospects remain difficult, says the International Monetary Fund (IMF), after its management completed the first review of the African country under the staff-monitored programme (SMP) earlier this month.

The 15-month SMP, approved in October 2014, constituted the lynchpin of the authorities’ roadmap for building a strong record towards normalising the relationship with Zimbabwe’s creditors and mobilising development partners’ support.

The programme was further aimed at strengthening Zimbabwe’s external position as a prerequisite towards arrears clearance, normalisation of debt servicing and restoring access to external financing. This would require further fiscal consolidation to rebuild the country’s capacity to repay, restoring financial stability and mobilising international support for resolving the country’s external debt situation.

However, the IMF warned that the country’s economic growth had slowed and was expected to weaken further this year.

“Despite the favourable impact of lower oil prices, the external position remains precarious and the country is in debt distress.

“Key risks to the outlook stem largely from a further decline in global commodity prices, fiscal challenges and possible difficulties in policy implementation. However, the authorities are committed to intensifying their efforts to ensure successful implementation of the programme and to lay the ground for stronger, more inclusive and lasting economic growth,” it said in a statement.

The IMF further highlighted that, despite economic and financial difficulties, the Zimbabwean authorities had made progress in implementing macroeconomic and structural reform programmes, particularly regarding clarifying its indigenisation policy, restoring confidence and improving financial sector soundness, as well as strengthening public financial management.

“During 2015, the authorities’ policy reform agenda will continue to focus on reducing the primary fiscal deficit to raise Zimbabwe’s capacity to repay; restoring confidence in the financial system; improving the business climate and garnering support for an arrears clearance strategy,” the IMF added.

Strong performance under the SMP would improve Zimbabwe’s repayment capacity and demonstrate that it could implement reforms that could justify a fund-financial arrangement, which could help tackle the country’s deep-rooted problems.

“The Zimbabwean authorities remain committed to implementing sound macroeconomic and structural policies. The authorities have stepped up their re-engagement with creditors, including by increasing payments to the World Bank and the African Development Bank.

“These re-engagement steps open the way for further constructive dialogue to identify feasible options for clearing the arrears to these institutions – a key step towards seeking rescheduling of bilateral official debt under the umbrella of the Paris Club,” the IMF added.

IMF staff would continue to support Zimbabwe’s economic reforms and their pursuit towards a debt relief strategy. Staff would also remain engaged with the authorities to monitor progress in the implementation of their economic programme and would continue to provide targeted technical assistance to support Zimbabwe’s capacity-building efforts and its adjustment and ongoing reform process.