Poor Africa and the IMF’s ‘bad faith’
LAST week’s Zimbabwean press coverage devoted nearly as much space to the International Monetary Fund (IMF) as the state-controlled media devoted to lambasting the political opposition and Briti
sh premier Tony Blair. Only the never-ending listings of farms being expropriated — so as to further destroy agriculture? — exceeded the space allotted to stories related to the IMF.
Some of the articles were focused yet again upon the long overdone denigration of the IMF. As with the fox of Aesopian fame who denied any wish to have the grapes after he had struggled in vain to reach them, so the pro-government press in Zimbabwe unhesitatingly derides the IMFwhensoever it appears that that institution will not support the country.
However, this is not unique to Zimbabwe, but is a characteristic of almost all those countries in Africa as are in debt default with the IMF, and therefore cannot avail themselves of monetary assistance from that Bretton Woods body.
The basis of the castigation of the IMF and, therefore, of denying any wish for IMF assistance, is invariably founded upon the allegation that the organisation is naught but a vehicle of imperialistic and colonising developed countries to dominate the undeveloped and lesser developed states and subject them to the yoke of the economically powerful. The IMFpolicies are belittled and scathingly dismissed as being weapons to gain the economic enslavement of Africa.
In Zimbabwe, the most frequently cited example of the alleged bad faith of the IMF is the supposed failure of theEconomic Structural Adjustment Programme (Esap) of the early 1990s.
The IMF critics claim that Esap was imposed upon Zimbabwe against the better judgement of the government.
They claim that Zimbabwe only embraced Esap because it had to access funding from the IMF, and the availability of that funding was conditional upon the adoption of Esap as the programme for Zimbabwean economic development.
This was repeated ad nauseum by the government and its newspapers in the late 1990s in order to justify discontinuance of Esap — notwithstanding the intensive eulogising of that same programme when it was first announced and in the years that it was launched. Repeatedly, the programme was said to be a Machiavellian strategy of subjugating Zimbabwe’s economy to those of the all-powerful first world countries.
The actualities were very different. In 1989, with the full blessing of President Robert Mugabe and his cabinet, then Finance minister, the late (and extraordinarily able) Bernard Chidzero, established “task forces” to assess the needs of the country’s various economic sectors and how those needs could best be addressed so as to assure the development and growth ofthose sectors. There was extensive and very wide-ranging interaction between the task forces and the key players in each of the economic sectors of agriculture, mining, manufacturing, tourism, wholesale and retail trade, and of finance and services.
After in-depth inquiry and evaluation, a framework of economic reform and enhancement was formulated. Thereafter, Chidzero required his advisors to assess the extent to which the proposals were similar to those applied in other countries under like circumstances, and to seek advice of those within the international community with experience and expertise in achieving successful economic structuring. Based thereon, the government formulated Esap and then solicited international support, inclusive of funding from the IMF, the World Bank and others.
Thus, clearly, Esap was not imposed upon Zimbabwe, but was conceptualised and devised by Zimbabwe, albeit also with input and advice from beyond Zimbabwe’s borders and including recommendations from bodies such as the IMF.
Initially, Esap failed or, at best, had very little success, for the government’s implementation was half-hearted and without conviction. There was selective implementation of some facets of the programme and disregard for others.
Thus, for example, although the architects of Esap had recognised that implementation would inevitably occasion some hardships, they were necessary evils for the greater good.
However, to minimise the hardships, Esap was to include the establishment and operation of a Social Dimensions Fund. That barely happened, with only minimal consideration of creating such a fund, and even more minimal operation of the fund. Zimbabweans suffered the foreshadowed hardships, but were not aided with the intended compensatory medication!
Because of the lethargic and apathetic approval to Esap by the government, the early years of the programme yielded little of the targeted benefits. Eventually, when it had no alternative, the government reluctantly intensified its implementation of the programme, resulting in some significant economic upturn from 1994 to 1997.
Then political objectives intervened once again, resulting in non-adherence to the substance of Esap, and that fuelled a reversal of the economic gains and an escalating economic decline from late 1997 to the present time. But the government could not accept culpability, for it perceives itself as infallible.
In denying responsibility, it necessarily had to find others to blame, and the IMF was a ready victim to be the recipient of that blame. This was especially so as it had become fashionable for all other countries as could not qualify for the IMF support to direct endless vitriol at IMF.
The virulence of Zimbabwe’s disparagement of the IMF intensified exponentially as the magnitude of Zimbabwean debt arrears increased. The greater the extent of Zimbabwe’s default in servicing its debt, commensurately greater and more vociferous were its attacks upon the IMF. This became particularly pronounced when, as prescribed by the IMF constitution’s provisions in respect of debt default, Zimbabwe’s membership was suspended, and even more when the IMF commenced consideration of possible termination of Zimbabwe’s membership.
Then Zimbabwe, very belatedly, embarked upon economic transformation, although limited to some extent, as the government remained obdurately and determined to continue its economically appalling land reform programme, and reversed itself on previously declared intents to privatise parastatals.
Nevertheless, and very substantially as a consequence of the determination of Reserve Bank governor Gideon Gono, Zimbabwe modified its monetary and fiscal policies. Moreover, at nominal levels only, but indicative of good faith, Zimbabwe commenced payment of its debt arrears. One result was that the IMF did not expel Zimbabwe, and instead only continued suspension of its membership, subject to six-monthly reviews.
Suddenly, in the eyes of Zimbabwe — or in particular the government and the state media — the IMF was no longer so evil, even if not yet perceived as being a valued friend, which it could well become once more. Last week’s press headlines emblazoned a joyful “IMF reprieve for Zimbabwe”, instead of yet again vituperative belittling of the body.