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IMF Weekly Briefing

Release Date: 14 Dec 2017
The IMF sees interest rate hikes by the US Federal Reserve as “on the right track,” Fund spokesman Bill Murray told reporters Thursday (December 14) in Washington.

“We always look at risks.  I mean that’s part of what we do and, you know, over the horizon-type risks.  But at this juncture, our general feeling is that the fed is on the right track,” Murray said.

The US Federal Reserve raised interest rates a quarter point higher, it’s third hike this year.

“Future moves in the policy rate should be gradual and dependent on the data, ensuring there are greater signs of wage or price inflation than are currently evident,” Murray told reporters.

Zimbabwe’s new president Emmerson Mnangagwa is calling for the rollback of sanctions, hoping to bring more money in to the economy hobbled by decades of mismanagement by former leader Robert Mugabe.

The IMF says it stands ready to help Zimbabwe, and sees signs that the economy of may improve if the government works toward implementing structural reforms.

“The Zimbabwe economy faces severe challenges.  Unsustainable fiscal deficit has led to severe liquidity shortages, created inflationary pressures and threatened the viability of the financial sector and the exchange rate regime,” said Murray.  “Restoring growth will require concerted efforts to tackle the fiscal deficit, including through rationalizing and better targeting of the expensive agricultural support programs.” 

“These efforts should be complimented by structural reforms to strengthen the role of the private sector by improving the business climate and reducing policy uncertainty in Zimbabwe,” Murray said.

A team of IMF experts has been in Zimbabwe meeting with officials this week, and will be reporting back their findings Murray said.

But generally, there appears to be an understanding within the new government that there must be a sustained push for structural reforms in order to restore the economy.

“They presented their 2018 budget on December 7th and that budget stresses that the government's intention to re-impose budget discipline, reform and open the economy and engage with the broader international community,” Murray said. 

“In this regard, the clarification and simplification of what's called the Indigenization Policy is a step in the right direction. “
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