IMF urges Zim to tackle challenges in banking sector

Tuesday, May 19, 2009

Harare - A visiting International Monetary Fund (IMF) technical delegation has expressed confidence in Zimbabwe's Short Term Emergency Recovery Plan (STERP), but would like the challenges facing the banking sector to be addressed.

Speaking to journalists after meeting the delegation on Monday, Zimbabwe's Finance Minister Tendai Biti said the technical team had expressed reservations over operations of the central bank.

"They are very pleased with STERP but they have expressed concern over the operations of the Reserve Bank of Zimbabwe (RBZ) and the public management system," he said.

He added that the team had also called for a census of the public service.

The visit follows a meeting of the Executive Board of the IMF earlier this month. It was at this meeting that the fund lifted its suspension of technical assistance to Zimbabwe in targeted areas.

According to the IMF, technical assistance can now be provided to Zimbabwe in areas of tax policy administration, payments systems, lender-of-last resort operations and banking supervision and central banking governance and accounting.

"This was an important decision of re-integrating Zimbabwe within the IMF. You cannot do business without its seal (IMF)," Minister Biti said.

He said the inclusive government, formed in February by Zanu-PF and the two Movement for Democratic Change (MDC) factions, was working towards normalising relations with the IMF and restoring its voting rights.

Zimbabwe currently owes the fund $118 million.

The minister said the team, which is on a two-week visit, would focus on establishing the credibility of the banking sector supervisory system, assess the balance sheet of RBZ, which is currently under-capitalised, as well as look at the country's tax administration and collection systems.

"Our challenge is to make RBZ a credible institution and not to attack anyone," said
Minister Biti, who added that the government would soon come up with laws to align the central bank's operations with best practices.

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