HomeCommentEric Bloch Column

Eric Bloch Column

IMF’s reprieve must not be wasted


AST week the International Monetary Fund (IMF) board of directors considered, once again, whether Zimbabwe’s membership should be terminated.

In terms of the IMF constitution, termination of membership would be justified in view of the magnitude of Zimbabwe’s default in repaying borrowings from the IMF and, moreover, that Zimbabwe has not even been paying the interest accruing on those borrowings. By now, Zimbabwe owes the IMF more than US$309 million, which equates to approximately $1,653 trillion!

But Zimbabwe’s membership of the IMF has not been terminated. Instead, Zimbabwe was once again given a stay of execution. The IMF resolved to review the issue of Zimbabwe’s membership in six months’ time.

Without making any threats, the IMF has made it clear that the outcome of that review will be determined by the extent that Zimbabwe, during the next six months, takes appropriate steps to reverse its economic decline and place the economy on a path to recovery.

That recovery must be such as would, amongst many other consequences, enable Zimbabwe progressively to service and repay its debt to the IMF. The IMF has made it clear that it does not expect Zimbabwe to repay the entire US$309 million, and interest thereon, instantly, and that it recognises that no economic upturn can be so great as to enable instant settlement of the entirety of Zimbabwe’s debt obligations with the IMF. But it does expect Zimbabwe to acknowledge that it has to take some constructive and substantive measures to enable it to begin to repay that which it owes.

The IMF decision is a welcome one, for it was very widely anticipated that the IMF would decide that Zimbabwe had been given more than enough chancesto regularise its debt relationship with the IMF, none of which were availed of. Instead, Zimbabwe arrogantly rejected all advice given by the IMF, notwithstanding that the advice was well-intentioned and motivatedsolely to assist Zimbabwe.

Whilst it is possible that not all the advice would have in reality been good and sound for the Zimbabwean environment, and not all of it would have assured restoration of Zimbabwean economic wellbeing, nevertheless it was founded wholly upon a genuine concern for Zimbabwe and an intent to assist Zimbabwe.

But over many years, not only has Zimbabwe studiously ignored almost all of the advice gratuitously given by one of its largest creditors, but Zimbabwe has constantly viewed each and every advice with the deepest suspicion unless the advice happened to coincide with the policies of the Zimbabwean government.

Moreover, Zimbabwe’s most frequent reactions to any advice forthcoming from the IMF have been to not only reject the advice, but to belittle both the advice and their source. Zimbabwe has unhesitatingly denigrated the IMF, has repeatedly suggested that the IMF policies have failed almost wheresoever they were pursued, and that the IMF is nothing other than a tool of imperialists, colonialists, and profiteering purveyors of globalisation. And Zimbabwe has steadily claimed that it does not need the IMF, and that it can successfully “go it alone”.

Nothing could be further from the truth. Admittedly, IMF policies have not always achieved economic transformation for economically distressed countries. In some instances the policies were ill-conceived and  oblivious to some fundamental conditions or circumstances in the affected countries.

In other instances, the policies would have succeeded, had the countries concerned implemented those policies with conviction and commitment, instead of — at best — paying lip-service only to the policies. Critics of the IMFunhesitatingly focus upon the examples of failures to achieve economic recovery in countries that have pursued IMF revival strategies, without analysing the causes of the failures. All too often those causes were the countries’ own fault, usually founded upon only selective implementation of the policies, or that the implementation was pursued only superficially, concurrently with pursuit of other, counter-productive policies. And the critics will never admit to proven successes of IMF policies andinterventions in many countries.

They will not recognise the dramatic upturn of many of the countries of Eastern Europe after the dissolution of the Soviet Union, the dramatic economic recovery of Mexico, the economictransformation of India, and the noticeable progress towards strengthened economies in Mozambique, Uganda, Tanzania, Ghana and many others. Instead,the critics cite only failures, and most of those failures were not because of defects in the policies, but were defects in the policy implementation.

There is equal misconception in the beliefs of some, including President Robert Mugabe, and the Minister of Industry and International Trade Samuel Mumbengegwi, and the Minister of Fiction, Fable and Myth, and many others of the governmental hierarchy, that Zimbabwe does not need the IMF and can achieve its much needed, long overdue, economic metamorphosis without the IMF, without the World Bank, and without those donor states as were, in the past, staunch supporters of Zimbabwe. To support their erroneous contentions, they repeatedly use Malaysia as an example of successful economic transformation without IMF assistance. Malaysia did achieve its economic change without the IMF, but its circumstances were wholly different to Zimbabwe.

It had an essentially sound financial sector. It was highly industrialised. It had not brought to the edge of destruction its principal productive sectors. And although its economy had been in regression, it had not sunk to the depths of collapse that characterise Zimbabwe’s economy. It had all the necessary ingredients, and the will to reverse its economic decline, and it had no fear of discarding, adapting and modifying its policies in order to achieve real economic transformation. Also of major importance, it did not perceive as its enemies the very countries with whom it had to interact to bring about its economic change. It collaborated with those who were theundoubted major potential trading partners, it fostered friendships instead of stimulating confrontations, and it interacted far and wide to ensure that it was a recognised player in fields of international trade.

Zimbabwe’s circumstances are very different. Zimbabwe is insolvent. Zimbabwe has reduced its main economic sectors, including agriculture, to the verges of extinction. Zimbabwe does naught but speak ill of those whowere, and should be, most of the country’s major trading partners, including the United Kingdom, the other countries of the European Union, the USA and manyof the countries in the Commonwealth. And Zimbabwe has tried hard to alienate bodies such as the IMF. It is surprising, therefore, that once again the IMF has given Zimbabwe a reprieve.

That it has done so is undoubtedly due to a very great extent to the vigorous endeavours of the governor of the Reserve Bank, Gideon Gono. The IMF is fully aware of the very considerable efforts he has made to apply monetary policies as would be a platform for economic recovery or, at the least, as would retard further economic decline.

In addition, although only able to do it to a very token extent, but nevertheless as a gesture of good faith, he procured that Zimbabwe commenced making some nominal payments to the IMF.

Whatsoever the reasons for the IMF reprieve, Zimbabwe must not be so stiff-necked as to spurn the opportunity given to it. If for no reason other than to save even more of Zimbabwe’s 12 million people from ever intensifying poverty, Zimbabwe must grasp the lifeline thrown to it. Itmust use the next six months to reinforce Gono’s monetary policies by aligning its fiscal policies with them. And, of extreme importance, it must not allow the forthcoming parliamentary election considerations to divert it from reversing prevailing destructive government policies, restructuring the land reform programme constructively, and in order to restore business confidence and regain foreign direct investment interest, must re-establish democracy, law and order and national reconciliation.

Perhaps government needs to acknowledge Winston Churchill’s statement that: “Democracy is the worst form of government, except for all those other forms that have been tried from time to time,” (undoubtedly including the Zimbabwean form of government!). If government would do so, Zimbabwe would cease to be an international pariah, and its economy would interact positively with the world.

Previous articleMuckraker
Next articleEditor’s Memo

Recent Posts

Stories you will enjoy

Recommended reading

You have successfully subscribed to the newsletter

There was an error while trying to send your request. Please try again.

NewsDay Zimbabwe will use the information you provide on this form to be in touch with you and to provide updates and marketing.