Gono faces tough call over demands
E Bank governor Gideon Gono is due in Johannesburg this weekend at the conclusion of his roadshow which took him to the United Kingdom this week.
He flew into London last Saturday after four days in Washington on what would appear to be a less-than-fruitful visit to the International Monetary Fund. While he has managed to keep open a door there, there has been no progress in terms of balance-of-payments support which the country needs more than anything else.
We don’t know what the final figure will be for the Homelink scheme but Gono’s estimation that US$60 million a month is already flowing from the diaspora, of which he hoped to capture 40%, cannot represent a sustainable long-term substitute for exports in terms of forex inflows.
Zimbabweans obviously wanted to know to what ends their hard-earned funds would be put. Gono may have been able to offer reassurance as to the attractiveness and security of the scheme.
But with the government boasting of an economic turnaround, without much evidence of one, it is already apparent that Gono is being used as grist to Zanu PF’s propaganda mill.
However impressive the revenues from Homelink, they are hardly likely to pay for more than a limited supply of food, fuel and power.
Gono will be the first to appreciate the limited nature of the RBZ’s British foray. Hence his excursion to Washington last week.
The IMF reflects the view of all key donors that there will be no money on the table until there is a domestic consensus in Zimbabwe on economic priorities. That in turn will require a political settlement that President Mugabe has turned his face against.
Despite some of the more preposterous claims being made by the Homelink team in London, Gono at least takes a sober view of the economy.
Gross domestic product, which one state paper insisted last weekend was “surging” (on the basis of IMF predictions), would continue to fall this year, the RBZ governor told the Financial Times.
The only silver lining to this particular cloud is that the decline would fall to between three and four percent. The rate would be closer to zero next year, he thinks, with real growth returning in 2006.
Many economists would regard this as a tad optimistic. So is the hope of bringing inflation down to 200% by December. But both estimates are distinctly conservative when placed alongside the sort of claims of an African miracle modelled on China being peddled at his roadshow.
Gono refused during his UK visit to be drawn on issues of democracy and human rights. But he did say he had taken on board IMF concerns about economic distortions caused by government’s dual foreign exchange and interest rate systems.
This is where things become a bit unstuck. President Mugabe’s view of the IMF is a matter of public record.
How can Gono guarantee stability in monetary policy when fiscal policy is susceptible to populist pressures as an election approaches? And how can he deliver the economic consensus donors require when the main opposition party is excluded from all consultative processes? Even the business community is not listened to.
As the election looms it is probable Gono will be asked to assume a more prominent role on Zanu PF’s election platform. That would be a fatal blow to his credibility.
This week’s visit to Britain has revealed the enormous scepticism surrounding any deals that involve the government. If Gono is to do his job effectively he must keep his distance from the desperate opportunists who sought to make political capital of his trip.
That is going to be a tough call.