HomeBusiness DigestAnalysts slam stalling of Zim/IMF talks

Analysts slam stalling of Zim/IMF talks

Godfrey Marawanyika

GOVERNMENT’S decision to postpone the Article IV consultation meeting with the International Monetary Fund (IMF) has been attacked by analysts as ill-timed.

>Initially, the Zimbabwe-IMF Article IV consultation was scheduled to take place from May 3-6 but government postponed the meeting to get its house in order.

In his cabinet reshuffle last month, President Robert Mugabe appointed Rugare Gumbo as the minister for the newly-created Economic Development portfolio.

Article IV meetings are an annual process between the fund and its members, which, among other things, review members’ obligation to the financier.

Minister Herbert Murerwa last week said the decision to postpone the meeting was a mutual one saying there were some logistical issues that had to be addressed.

Economist John Robertson said: “This is not a long-term issue but an immediate issue as the IMF wants to know our status. They are keen to know our problems. The longer we leave it, the worse it becomes.”

Robertson also noted that Reserve Bank governor Gideon Gono had failed to embrace the IMF as much as he would have liked to because of lack of cooperation from political leaders.

“He is being undermined by the fixed attitude of some political leaders,” Robertson said.

“Some people are obviously undermining him by their fixed attitude.”

Last week the Ministry of Information dismissed reports that there were leaders who were bent on undermining Gono’s plans, saying he was fully supported by the leadership.

“It’s surprising that the government at the eleventh hour postponed the meeting yet they knew about it for some time,” said one economist.

“Maybe the ‘development cabinet’ has its own economic turnaround plan which does not require IMF support. My own reading is that something is going on. By turning to the IMF Gono could have brewed his own problems given that government has said we are turning to the East.”

The postponement is seen as a slap in the face for Gono who since his 2003 appointment has been battling to engage the Bretton Woods institutions.

Mugabe has in the past voiced his concerns over the adoption of IMF recovery prescriptions, saying his government accepted the Economic Structural Adjustment Programme (Esap) at the behest of the late former Finance minister Bernard Chidzero.

Esap led to the opening up of local markets but manufacturers were not prepared for liberalisation.

The financial sector was one of the major beneficiaries of Esap, which resulted in the mushrooming of indigenous-owned banks.

However, independent economist Eric Bloch, who sits on the central bank’s advisory board, this week said he was made to understand that the meeting had not been postponed.

“What I have been made to understand is that the meeting was supposed to take place in June and not May,” he said.

“However, when the IMF requested that the meeting be brought forward that’s when the government said that they won’t be ready with some of the information the IMF wants.”

In February, the IMF’s highest decision-making body spared Zimbabwe from expulsion but it noted the country’s payment of US$16,5 million fell short of reducing Harare’s arrears.

The board noted efforts by Harare authorities to increase payments during the second quarter of this year, but encouraged Zimbabwe to resolve its overdue obligations.

Zimbabwe is in arrears with the IMF to the tune of US$306 million or about 57% of its quota to the fund.

Another bank economist said government’s decision was sending a wrong signal to the international community.

“The IMF is used by investors as a barometer for investment. The government decision does not send a good signal, given that they gave us a window of opportunity in February,” said the economist.

“Investors will start to question government’s sincerity in trying to dictate terms to the IMF.”

He said the Chinese view us as a market, not an investment destination.

“They bring us finished products such as buses, planes and almost everything but they are not building any production plants, something which Western firms do.”

Zimbabwe last week purchased two MA60 planes from China with a third one expected to be delivered later.

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