This and the appreciation of the South African rand, the major currency of Zimbabwe’s (main) trading partner, has caused a liquidity crunch that has weakened economic activity, it said.
The external position remains precarious with low levels of international reserves, a large current account deficit, and external arrears, it added.
The IMF said the technical programme would also cover clarifying the indigenisation and economic empowerment laws to help Zimbabwe boost mutually beneficial domestic and foreign investment, allay fears over property rights and reassure markets of the government’s open invitation to invest in Zimbabwe.
Zimbabwe Finance Minister Patrick Chinamasa told a press briefing on Monday that Harare was committed to reforms to put the economy back on track.
We are equal to the task, we are going ring-fence budget allocation towards social spending, he said.
The government would also have to reduce its public sector wage bill taking up 76 percent of the budget, which Chinamasa described last week as embarrassing, he added.
We are going to work hard to reduce the level of the wage bill. I have begun engaging my colleagues informally, he said.
Chinamasa did not elaborate but has but he has previously ruled out the government would reduce its 235,000 workforce.