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2003: Year to forget in a hurry

Ngoni Chanakira

ZIMBABWEANS, including President Robert Mugabe and his “War Cabinet”, will want to quickly forget fiscal year 2003.

Verdana, Arial, Helvetica, sans-serif”>While citizens will vouch to forget the horrendous year for its economic and social decay, President Mugabe and his team might do so for other reasons.

“Never have so many been disappointed by so few” can probably best sum up events of this traumatic year.

When he presented his 2003 National Budget to parliament in November last year the Minister of Finance and Economic Development, Herbert Murerwa indicated the urgency of addressing the severe economic crisis facing Zimbabwe.

He said in particular, containing inflation remained central to reversing output decline, restoring business confidence, increasing foreign currency generation, encouraging savings, investment and employment creation.

Inflation has however continued to soar from Murerwa’s predicted and conservative 96% to a record 525,8% as of October.

High inflation forced the minister to go cap in hand to parliament in August to seek legislator approval for a $671 billion Supplementary Budget to boost coffers that had virtually run dry.

Murerwa told the nation that as inflation escalated and economic performance worsened, a growing proportion of the population was now living below the poverty datum line – further deteriorating standards of living.

“Mr Speaker Sir, I believe that it is important that our policies must fight inflation,” Murerwa said. “Continued failure to do so threatens to destroy the very social fabric of the nation.”

Economic and social conditions in Zimbabwe have indeed deteriorated progressively over the past four years.

Real output has dropped by one third, inflation has reached 525,8% and welfare and poverty indicators have deteriorated.

Severe food shortages have necessitated massive food imports and donor assistance as two thirds of the population required food aid in 2002/03.

The country’s balance of payments has been under severe pressure since 1999, when Zimbabwe began to accumulate payments arrears.

There is little productive investment in the economy and there are reports of significant capital flight and emigration of skilled labour.

“The economic crisis reflects to a large extent inappropriate economic policies: loose fiscal and monetary policies, the maintenance of a fixed exchange rate in an environment of rising inflation, and administrative controls,” the Washington-based International Monetary Fund (IMF) said in its latest report on Zimbabwe.

“Increased regulations and government intervention have driven economic activity underground and contributed to the chronic shortages of goods and foreign exchange. The impact of these policies has been exacerbated by the fast-track land reform programme, recurring droughts and the HIV/Aids pandemic.”

The IMF said meanwhile investor confidence had been eroded by concerns over political developments, weak governance and corruption, problems related to the implementation of the government’s land reform programme, the push for an increased indigenisation of the business sector, and the selective enforcement of regulations.

World Bank executive director responsible for Zimbabwe Louis Kasekende last week said the country seriously needed to “change for it to progress”.

He said government and business needed each other and should stop mistrusting each other.

Kasekende said organisations such as the 150-member National Economic Consultative Forum (NECF) should not be gatherings merely to “talk about problems” but “gatherings for action”.

“These gatherings should thrash issues out,” Kasekende said. “What you need at the moment is action, action, and more action.”

He said against the backdrop of some worrisome developments, government needed to take urgent action to arrest the economic decline, bring inflation under control and return the economy to a sustainable growth path.

Analysts said decisive steps to restore confidence in government’s economic policies, including enhanced governance and transparency and respect for the rule of law and broad ownership of the reform process, would be key to revamping productive investment, attracting needed foreign direct investment, and regaining the support of foreign creditors and donors.

Murerwa in his Supplementary Budget said resolving the Zimbabwe crisis would involve some pain.

Citizens question however how much pain they still have to experience.

For President Mugabe and his family, probably fewer trips to first world capitals were a major disappointment and could have been painful during fiscal year 2003.

Because he is now banned from travelling to the European Union and the United States of America there weren’t any escapades to Paris’ Champs Elysée for example, or to Britain’s Harrods – the world’s largest and arguably most expensive shopping facility.

The first family this year probably had to make do with noodle soup from oriental trips to Malaysia and the Far East, while Zimbabwe starves!

Zimbabweans pray Murerwa’s 2004 Budget will brighten their dim hopes.

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