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WB chief threatens ‘example’ of Zim

Godfrey Marawanyika

THE World Bank has become the latest organisation to urge the government to implement viable economic policies or risk losing financial support altogether.

face=”Verdana, Arial, Helvetica, sans-serif”>World Bank president Paul Wolfowitz this week said his organisation could withhold further aid to Zimbabwe to “set an example” for other truant countries that might behave like Zimbabwe.

Wolfowitz made the remarks on Tuesday in Tokyo on the first stopover of his Asian tour.

He said the bank would be allocating funds “very, very carefully, and in the case of Zimbabwe, perhaps not at all”.

“My Africa experts say that with the kind of misgovernance that is taking place in Zimbabwe, it is not clear that development is possible at all,” he said.

“For several reasons we have to be very careful about corruption and its

effects,” he said. “We need to set an example. It is a terrible waste of funds if it is diverted into corruption.”

Wolfowitz’s comments come a week after the International Monetary Fund (IMF), the World Bank’s sister institution, expressed similar concerns over the dire situation in Zimbabwe.

Wolfowitz said his organisation was worried about the level of corruption in Zimbabwe.

The IMF warned that unless there was a drastic policy shift the economic crisis would worsen. It said inflation was likely to end the year close to 400% while the economy would contract by about 7%.

The fund said Zimbabwean authorities had not met policy commitments made last December and that in the absence of “decisive policy action, the economic outlook looks bleak”.

It said difficulties in agriculture and the disastrous Operation Murambatsvina would worsen the situation. Agriculture – the mainstay of the economy – has collapsed because of the violent implementation of the fast-track land reform started in 2000.

Investment fell sharply and shortages of food, fuel, electricity and other basics have become pervasive.

For an economic turnaround to be achieved, the IMF stressed the need for a comprehensive policy package.

The IMF said for macro-stabilisation, the immediate priority was a strong fiscal adjustment to limit government’s deficit to 5% of GDP.

The IMF also recommended that Zimbabwe liberalise and unify its exchange rate. It said there was need to tighten monetary policy.

In August, Zimbabwe World Bank’s country director, Hartwig Schafer, said for the six-year economic meltdown to be reversed, economic restructuring like the one which helped the former Soviet Union states would be required.

Schafer said the crisis facing the country was largely caused by poor government policies.

The ill-planned land reform had disrupted farming which resulted in maize production declining by three quarters. It also badly hit exports.

The government has run huge budget deficits of up to 22% of GDP since 2000, and has printed money to cover triple-digit hyperinflation.

The World Bank has produced a report on Zimbabwe’s agricultural sector which said government’s fast-track land reforms had redistributed 80% of farmland and improved racial distribution of agricultural property but worsened poverty.

The report said the land reform programme coincided with a deepening political and economic crisis which saw GDP shrinking by more than 20% since 2000, while agriculture registered a cumulative decline of 26%.

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