More self-congratulatory lies


By Tendai Biti

THE delayed mandatory Fourth Quarterly Monetary Policy Review was eventually presented on January 26.



serif”>What was unmistakeable from the long-winded presentation was that it had little to do with issues of stabilising the key macro-economic and monetary policy crises of inflation, interest rates and the exchange rate.


Rather it was a statement of vitriolic spin, one of sanitising Zanu PF and mendaciously misleading the country into believing that the economy is on the mend.


The truth of the matter is that the statement was no more, nor less than Zanu PF’s election manifesto for 2005. It is therefore critically important to interrogate the document on the basis of the real issues that an RBZ governor is supposed to address.


Firstly, the integrity of forecast inflation and growth rates: the monetary policy statement envisages the continued decline of inflation throughout 2005, with the resumption of GDP growth of between 3 and 5%. Where do these fanciful figures come from? Do they imply that there will actually be a policy reversal sometime, with a devaluation sufficient to restore exporter viability — this would also, in the short-run lead to the rekindling of inflation.


It must be pointed out that the Ministry of Finance in its budget for the current year used 270% as its underlying inflation assumption for 2005.

There is therefore a clear contradiction between the budget statement and the monetary policy review — one that neither surprises nor shocks us.


Secondly, the viability of exporters: the main instrument for reducing inflation has been the deliberate overvaluation of the Zimbabwe dollar in the inaccurately named “auction” system. Inflation decline has, as a result, been at the expense of closing down the export and import competing sectors of the economy.


Far from reversing this in the latest MPS, Governor Gideon Gono has dug in his heels. Exporting will become progressively less viable in 2005, foreign currency will become more scarce, more jobs will be lost, more shrinkage of incomes and dimming of peoples’ lives and prospects. It’s going to be a continuation of what the state media call “an economic turnaround” but ordinary Zimbabweans who struggle through its effects know better.

Thirdly, the banking crisis: let us bear in mind that Gono’s first action as governor back in December 2003 was to precipitate the banking crisis by engineering a sudden rise in interest rates from under 100% to around 900%. He then handed the illiquid banks the poisoned chalice in the form of money from the Troubled Banks Fund.


From there on, Gono stumbled from one mismanagement of the crisis to another, so that 2004 ended with even more uncertainty about the country’s once strong financial sector than a year earlier.


In this MPS, Gono trumpets the Zimbabwe Allied Banking Group (ZABG) as the solution, despite the abject failure of the Consolidated Bank of Kenya, when in similar circumstances the government of Kenya attempted to bail out a number of failed banks.


Since the ZABG was first announced in September last year, several of the potential members have been dropped and the grand proposals for ZABG to be a unified bank have given way to it being an amalgam of its constituent parts.


What individual Zimbabwean or private sector client would ever have anything to do with ZABG? The monstrous misapplication of public funds that the creation of ZABG represents can only be propped up by more public money going into it in the form of further capitalisations and parastatals and government departments becoming its clients.


Fourthly, parastatals and local authorities: the parastatals have long been a vehicle of clientellism and patriarchialism fostered and promoted by Zanu PF and its parasitic followers. The country is now suffering the consequences. The abuse of the local authorities has also been to promote the narrow, selfish interests of Zanu PF. The prime example of this is the systematic interference with the work of the elected MDC council of the City of Harare. Its programme of recovery for the capital city was thwarted and the council eventually illegally and cynically pushed aside.


Sight must also not be lost of the fact that since 1998 the government has hardly allocated any resources for capital purposes to local authorities, thus forcing them to divert revenue to investment. In terms of the Urban Councils Act, capital investment is the responsibility of central government.


The truth of the matter is that no amount of spin, lipstick and mascara will hide the irreversible structural decline of our economy under this regime. The sooner Governor Gono knows that this regime will happily use overzealous individuals driven by unbridled personal ambition, and then drop them at whim when circumstances change, the more honest and circumspect he may become.


Indeed, this country has had enough of dishonesty and half-baked measures that address symptoms and not substance. We need a Restart — a new beginning that boldly and sincerely addresses the structural exigencies and legacy of this criminal state. Such a paradigm shift is not possible under Zanu PF or its functional acolytes at the Reserve Bank.


* Tendai Biti is MDC secretary for economics.

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