IMF membership benefits Zimbabwe
By Erich Bloch
OVER the last two months there was an immense international media frenzy as to whether or not Zimbabwe’s membership of the International Monetary Fund (IMF) would be terminated.
ith very rare exception, the newspapers, radio and television services of the United Kingdom, South Africa, USA and elsewhere pronounced authoritatively that it was almost absolute that the IMF would, on September 9, expel Zimbabwe.
In like manner, much of the Zimbabwean independent press foreshadowed probable expulsion. Inevitably, the state-controlled media was equally vociferous, but in diametrically opposite vein, contending that there was little or no possibility of Zimbabwe being ousted from the IMF, whilst concurrently contending that if that very unlikely event occurred, it would be of little impact upon Zimbabwe.
Almost all demonstrated their great ignorance of the realities. In the first instance, the IMF meeting of September 9, was of the IMF’s board of directors, and that board has no power to terminate the membership of any state. All it can do, if it thinks fit, is to recommend to the IMF members that a country’s membership cease.
Had the board decided upon such a recommendation, the general meeting of the IMF to be held on Monday would have considered it, and either agreed upon continuation of membership or upon expulsion.
However, it is improbable in the extreme for the decision to have been one of expulsion, for such a decision would have required the affirmative vote of at least 85% of membership.
Although Zimbabwe has alienated much of the international community, and is left with very few friends, nevertheless those countries in the world as have similar authoritarian rule to that which characterises Zimbabwe, would undoubtedly have supported Zimbabwe. That is especially so of various countries in Africa and the Far East.
Concurrently, many other countries would probably have abstained from the vote, for on the one hand they would not have wished to be seen to be supporting Zimbabwe, whilst on the other hand they will have recognised that if Zimbabwe lost its membership, its confrontational arrogance would not only have provoked an intense “Don’t Care!” attitude, but it would demonstrate its contempt for the expulsion by even greater than heretofore dismissal of the fundamentals of good economic governance, respect for human rights, law and order, and democracy.
In contradistinction, if Zimbabwe remained a member, there would be continuing opportunity to seek to influence constructive Zimbabwean transformation.
In the end result, there was no need for members of the IMF, other than those represented on that organisation’s board of directors, to consider how to vote, for once again the board resolved that Zimbabwe’s membership should continue, albeit with the suspension constitutionally prescribed in respect of members with extended arrears in settlement of debts to the IMF.
As was the case with three prior decisions, the board’s determination is valid for six months, whereafter it will again review the circumstances of Zimbabwe and its membership.
Whilst it is probable that an influencing fact in the board’s decision will have been a recognition that the general meeting would not resolve upon Zimbabwean expulsion, it is probable that of greater impact upon the board and its decision will have been the fact that although Zimbabwe is still massively indebted to the IMF — with gross arrears in repayments — a very real effort has been made to reduce these arrears.
Approximately US$131 million has been repaid in 2004 and this year against the total indebtedness of US$293 million. The payments made were inadequate as compared to the total indebtedness and the prolonged period of arrears, but were nevertheless very substantial in the light of Zimbabwe’s very straitened economic circumstances.
The IMF board will probably also have given cognisance to the extent to which Zimbabwe has recently pursued various economic measures as are prerequisites to an economic turnaround.
Whilst the changes in economic policies have not, as yet, been sufficient to assure a transformation of the distressed economy, they have been more constructive than any since late 1997.
Amongst them, strongly recommended by the IMF, national and international economists, and many in Zimbabwe’s private sector, have been the belated movement in exchange rates, the minimisation of the plurality of interest rates and the inadequate but first tentative steps to contain governmental spending.
Also probable influencing consideration was that, for the first time in years, Zimbabwe had ceased berating and belittling the IMF. Unfortunately, however, that was short-lived!
For years, Zimbabwe has petulantly claimed that it did not need the IMF, and could “go it alone”, citing Malaysia’s successes in doing so as an example, despite there being virtually no similarities in the then economic circumstances and resources of Malaysia with those of Zimbabwe today.
But, since Dr Gideon Gono became governor of the Reserve Bank of Zimbabwe (RBZ) in December 2003, Zimbabwe began to interact constructively with the IMF.
Most remarkably, when compared to the years of embittered criticism of the IMF, and denial of any need for a relationship between it and Zimbabwe, the Minister of Finance, Dr Herbert Murerwa stated in his 2005 mid-term fiscal review on August 16 that Zimbabwe wishes to have constructive interaction with the Bretton Woods institutions (the IMF and the World Bank). This was a radical change of stance, and a most welcome one.
When the decision of the IMF board of directors became public, not only Gono spoke positively and undoubtedly with relief after his immense endeavours to achieve the decision, but so too did Murerwa.
It is incomprehensible, therefore, that only a few days later, in Havana, Cuba, President Robert Mugabe spoke out in a totally different tone to that of Murerwa, Gono, his newspapers, and many within his government.
He spoke out scathingly against the IMF and alleged that the IMF had never been a friend of developing nations, or of assistance to them.
Clearly this was not the attitude of the Zimbabwean government when it borrowed hundreds of millions of dollars from the IMF. Moreover, facts on the ground differ with such an allegation.
Examples of economic turnaround and growth, partially as a result of IMF assistance and advice are very many. The metamorphosis of many of the economies of countries which formerly constituted the now defunct Soviet Union cannot be credited exclusively to the IMF and the World Bank, but those bodies indisputably were major players in achieving the very impressive economic developments in many of those countries.
Nearer to home, Zambia’s economy has been reborn after being brought to near total destruction under former President Kenneth Kaunda. Once a new government was in place and adopted the principles of market-force economies and responsible international interaction which included finance and guidance from the IMF, Zambia was set upon a path of steady, ongoing economic recovery, which is still continuing.
The same holds good for Mozambique which, under the authoritarian late Samora Machel, became evermore impoverished. However, once then President Joaquim Chissano came to power, liberalised the economy and interconnected positively internationally, Mozambique was set upon a path of economic improvement.
Presently, that country is still a very poor one, but over a period of a few years the per capita income has quadrupled, inflation dynamically reduced, investment stimulated, employment created and progress made towards economic well-being.
In contrast, the Zimbabwean economy has been in continuing decline. Uganda, Tanzania, Kenya, Ghana, Mauritius and many others can also bear witness that the IMF has been a substantive contributant, amongst others (inclusive of political will and policy changes) to the advancement of developing countries.
If Zimbabwe genuinely wishes to achieve economic transformation, it must be prepared to acknowledge the need for change, and the need to be part of the world community, instead of being almost isolated by all but a few.
The IMF and the international community are ready to collaborate with Zimbabwe, but “it takes two to tango”, and Zimbabwe must show a like readiness.