By Nick Mann | 7 December 2012

The African Development Bank has approved a $24.7m grant to enable economic and public finance management reforms in Zimbabwe.

The project, which will run from 2013 to 2105, aims to address the ‘huge capacity gap’ in Zimbabwe’s public sector caused by a decade of economic and political difficulties.

Most of the money will be spent on building up Zimbabwe’s Aid and Debt Management Office, the Zimbabwe Revenue Authority, the Zimbabwe National Statistics Agency and other bodies.

In particular, the funds will help to create a legal and institutional framework for public-private partnerships, as well as improving ‘effectiveness, efficiency and accountability’ in revenue, expenditure and debt management.

An AfDB briefing, Capacity building for public finance and economic management project, says that despite ‘significant’ improvements in the country’s political situation since 2008, there are ‘systemic weaknesses’ in most critical stages of the country’s budgeting process. Closing this capacity gap would enable the reforms needed to build a lasting political consensus on ‘pro-growth policies’.

‘The country remains fragile and the fiscal space remains tight. Significant increases in expenditure to address capacity challenges could create a financing gap which, in the absence of external financing, could lead to further accumulation of arrears,’ it explained.

‘Timely external intervention is, therefore, needed to support the country in building capacity to intensify and consolidate economic and public finance management reforms in order to sustain the gains registered so far.’

The grant ‘will go a long way in helping Zimbabwe attain sustained economic growth and development, which are fundamental to job creative and poverty alleviation’, the AfDB said.