Country Report Zimbabwe April 2011

Outlook for 2011-12: Policy trends

Economic policy will continue to be driven by political considerations, with the proximity of elections overshadowing policy reform. However, there is also likely to be a continuing struggle for influence both between ZANU-PF and MDC ministers, and between rival economic ministries that are controlled by the MDC; this will add to the confusion over Zimbabwean economic policymaking and risks reinforcing the perception in some areas that the MDC is simply not up to the task of running the economy. The IMF has called on the government to entrench property rights, improve labour market flexibility and reform the banking sector as part of a move towards a staff-monitored programme. However, broader reforms-including further restructuring of the Reserve Bank of Zimbabwe (RBZ, the central bank), the enforcement of minimum equity capital requirements and, crucially, attempts to restrain public-sector pay-are unlikely to be implemented in the run-up to elections, since they would be politically controversial. After the polls, much will depend on the make-up of the new administration. If the MDC secures power, a large increase in donor support can be expected and the IMF will help to shape a prudent economic policy. If, however, the polls are violent, or if ZANU-PF continues to dominate, there is unlikely to be substantial progress with reform.

© 2011 The Economist lntelligence Unit Ltd. All rights reserved
Whilst every effort has been taken to verify the accuracy of this information, The Economist lntelligence Unit Ltd. cannot accept any responsibility or liability for reliance by any person on this information
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