HARARE – The International Monetary Fund (IMF) has called on President Emmerson Mnangagwa’s regime to establish clear accountability measures for the recently launched Mutapa Investment Fund, addressing concerns about its potential for misuse.
The Mutapa Fund was created after the renaming of the Sovereign Wealth Fund by Mnangagwa through Statutory Instrument 156 of 2023 (SI 156/2023) in September last year. The notice transferred shares in the 22 State-owned enterprises to the Mutapa Fund.
Mnangagwa further exempted entities such as the Reserve Bank of Zimbabwe (RBZ), AFC Commercial Bank, the Infrastructure Development Bank of Zimbabwe (IDBZ), NetOne Cellular (Private) Limited, National Railways of Zimbabwe (NRZ) and Air Zimbabwe and 16 others from scrutiny.
The IMF staff team led by Mr. Wojciech Maliszewski visited Harare on January 31-February 14, 2024, to discuss the authorities’ request for a Staff Monitored Program (SMP).
A report they released on Wednesday morning highlighted a number of issues including that Zimbabwe’s economic growth is expected to slow down in 2024 by 3% due to drought, existing exchange rate distortions and corruption.
The mission further urged the government to ensure “financial reporting, and accountability oversight of the recently established Mutapa fund are in line with international standards and good practices.”
“Discussions covered policies to restore macroeconomic stability and improve growth prospects, focusing on addressing the sources of fiscal pressures including quasi-fiscal operations (QFOs) of the Reserve Bank of Zimbabwe (RBZ); liberalizing the foreign exchange market and establishing an effective framework for exchange rate and monetary policies, and progressing on reforms to improve economic governance and reduce corruption vulnerabilities.
“The mission encourages the authorities to accelerate the FX (Forex) market reform by promoting a more transparent and market-driven price discovery in the official exchange rate and by removing existing exchange restrictions and distortions.
“In particular, the restriction on the 10 percent allowable trading margin for pricing domestic transactions should be eliminated. The FX market reform should be accompanied by establishing an effective framework for exchange rate and monetary policies.
“Establishing such a framework requires careful preparations, including, among other steps, comprehensively addressing underlying sources of fiscal pressures. The RBZ Act should be amended, including to narrow its legal mandate to core functions,” IMF said.
“Structural reforms aimed at improving the business climate, strengthening economic governance and reducing corruption vulnerabilities are key for promoting sustained and inclusive growth and would bode well for supporting Zimbabwe’s development objectives embodied in the country’s National Development Strategy 1 (2021-2025).
“In this context, the mission encourages the authorities to ensure that the corporate governance arrangement, transparency and financial reporting, and accountability oversight of the recently established Mutapa fund are in line with international standards and good practices.”
During its inception, Finance Minister Mthuli Ncube said the Mutapa fund was intended to manage the country’s natural resources and invest them in a way that will benefit future generations.
The IMF further noted that sustainable development in Zimbabwe would also require a resolution of the debt overhanging. It was also recommended for Harare to consider international re-engagement as critical for debt resolution and access to financial support.
The mission said the authorities’ re-engagement efforts, through the Structured Dialogue Platform, were key for attaining debt sustainability and gaining access to concessional external financing.
