Eric Bloch Column

All the economy wants is honesty

By Eric Bloch

ALL but the public sector have been fully aware, for many years, that a country’s economic well-being requires, as an absolute prerequisite, total alignment and compatibility between monetary policies

, fiscal policies and all other government policies.

If those policies are not synergistic, even those that are potentially constructive cannot achieve targeted economic objectives, for they are undermined and counteracted by the other conflicting policies.

Few can credibly challenge that, since his appointment as governor of the Reserve Bank of Zimbabwe in December 2003, Gideon Gono has striven to bring about a lasting and substantial economic revival. In the short-term he achieved some remarkable successes.

These include reducing inflation from 622,8% (year-on-year) in January 2004 to 123,1% in March 2005, lowering of annual money supply growth from 490,9% in January 2004 to 219,4% in November, and attaining an inflow of foreign exchange in 2004 of US$1 710,8 million as against US$301,7 million in 2003. The successes also include the reining in of gross imprudence and pronounced breaches of the fundamentals of good and sound corporate governance within the financial sector.

But recently some of those achievements have been eroded, and are at great risk of being reversed. Although Gono continues his intensive efforts to bring into being an economic upturn that would be ongoing, as evidenced by not only the passion with which he presents his monetary policy reviews and introduces new or modified policies but also by his forthrightness and his frequent courageous statements at variance with prevailing political ideologies and policies, some of his endeavours are being negated and destroyed.

However, despite the government’s vast tendency towards denial of the politically unpalatable, and its usually unending ability to reject facts that are unwelcome to it, it sometimes becomes sufficiently aware of them that it then energetically seeks to attribute those facts to causes unrelated to the government, and invariably without any foundations in reality.

A prime example of such governmental strategy has been the intensity with which it has alleged, and continues to claim, that Zimbabwe’s economic woes are due to drought, to the evil machinations of Western states in general and the United Kingdom in particular, inclusive of contentions that they have applied economic sanctions against Zimbabwe, and due to the acts of political opponents, supposedly aided and abetted by the captains of commerce and industry.

Of all those supposed economic destroyers, only that of drought has any substance, only to a limited extent, but the government used them to persuade the electorate and others that it has not created the economic morass.

The hard facts are that if only enough seed is planted to grow up to between 800 000 and 900 000 tonnes, it is impossible to produce 1,8 million tonnes. However, that did not deter the Agriculture minister and his minions repeatedly foreshadowing such a sizeable harvest, even claiming that Zimbabwe would be able to resume the exporting of maize.

Equally far-fetched forecasts were continuously expounded as to the size and quality of this year’s tobacco crop, ignoring the authoritative contrary advice of those within the tobacco-growing industry. Last year’s projections by the government, as to the quantum of winter wheat production were just as hallucinatory, and indications are becoming increasingly pronounced that the government is deluding itself (and trying to delude others) once again as to the outturn of the forthcoming winter wheat season.

The sharply honed skills of the government in self-deceit are not restricted to the Agriculture ministry. Both the former Industry and International Trade minister and the incumbent are on record as claiming that the spate of business closures are naught but acts of deliberate economic sabotage by commerce and industry, intended to exacerbate the already disastrously high levels of unemployment and to plunge the economy down to even greater depths.

However, it is difficult in the extreme to believe that businessmen will destroy that which they developed over decades, and thereby impoverish themselves, merely in order to embarrass the government or aid a political opposition. The mind boggles at the concept that the business world is willing to go into self-destruct mode in order, most improbably, to overthrow an authoritarian government which has demonstrated its ability to stay in power despite a prolonged calamitous economic environment.

Similarly the European Union, the US and some Commonwealth countries have placed travel and financial sanctions upon most of the ruling party and governmental hierarchy and upon their families, but they have not barred trade with, or investment in, Zimbabwe. And some donor states have discontinued the provision of aid to Zimbabwe, or reduced the extent of that aid. They did not do so in order to prejudice the Zimbabwean economy, but because they could not obtain the reasonable satisfaction that they needed that their aid would not be abused or misused for political purposes.

Being inundated with aid appeals from other nations where the required assurances were forthcoming, they have prioritised their aid in favour of countries other than Zimbabwe. They have not done so as an economic sanction upon Zimbabwe, but so as to be reassured that aid given by them is applied wholly to deserving, intended purposes.

Year after year, the government also projects economic upturn, and last November even stated that in 2005 Zimbabwe would have real economic growth, instead of the negative growth of recent years. While making unbelievable projections of agricultural output, accusations of economic sabotage by commerce and industry, bitter recriminatory charges of economic sanctions being applied by the international community, and while continuing to spend at levels far beyond its means, the government nevertheless has the gall to try to dupe the populace into believing that the economy has been positively turned around and is on the threshold of immediate growth. The unemployed, impoverished and under-nourished know otherwise!