HomeOpinionReforms first before any debt relief for Zim

Reforms first before any debt relief for Zim

By Tinashe Chimedza

ZIMBABWE and the International Monetary Fund (IMF)’s love and hate relationship comes under focus as the government hosts an IMF team in the hope of avoiding being axed from the instituti


The visit comes after the government presented a supplementary budget that has become a permanent feature of its insatiable appetite for resources, the adverse effect of which has been to drive a spiral of deficits that have eaten into an economy that is already on a yo-yo fall-out, especially after the controversial land grab of 1999/2000.

This far, Zimbabwe has miraculously escaped being axed from the IMF. This visit thus bears pressure on the government to start showing its commitment to reform and respect the rule of law.

The visit brings into focus a rather tumultuous love and hate relationship that has characterised Zimbabwe’s relations with the IMF since Zimbabwe became a member in September 1980.

It is a relationship clogged with spectacles including the failure of the Economic Structural Adjustment Programme (Esap) initiated in 1991 and the government’s rhetoric rejecting policy advice from the international financial institution.

The visit will be informed by an adverse economic environment which includes the harrowing effects of the government’s controversial land-grab, massive unemployment, increasing poverty and more recently, the man-induced tsunami infamously dubbed “Operation Murambatsvina”.

The social and economic situation in Zimbabwe is worse than a country at war and the country’s global competitive index stands at 99, meaning investing in Zimbabwe is as risky as investing in a war-torn country.

Inflation has surged with a vengeance to 254,8% and with the partial dollarisation of the economy through the sale of fuel in foreign currency, the inflation rate will predictably surge further.

The IMF will certainly take interest in several policy announcements made by the government including the supplementary budget presented on August 16, the taxes that the minister imposed on companies trading on the stock exchange, continued price controls and the prescription by the government that pension funds invest 35% of the value of their stocks in government bonds.

On the side of the government, policy options are severely constrained by a ballooning domestic debt and a US$306 million that is due to the IMF, not including debts owed to other international financial institutions and banks.

What makes the IMF debt more urgent is that the IMF has recalled its debt, meaning that Zimbabwe must repay what it owes the fund as of July 31 – an impossible task considering empty foreign currency coffers, a contracting economy, increasing oil prices and a shrinking tax base.

The government’s attempt to repay its loans has led to an intractable spectacle that has seen emissaries off to Iran, South Africa and China where the “Look East” policy has attracted muted response from the Chinese.

The IMF’s visit also comes at a time when a global coalition of non-governmental organisations have been united and acting under the banner of “Make Poverty History”, urging debt relief, more and unrestricted aid for developing countries and fair trade.

The IMF’s visit therefore puts into focus not only the IMF/Zimbabwe relations but also the outcomes that IMF-supported policies have brought, especially to Africa.

The challenging question therefore revolves around how Zimbabweans are supposed to engage with the IMF under the present conditions in which Zimbabwe is massively indebted to the IMF and a difficult social and economic situation in which the government has made investment – local and international – almost impossible by its disregard of the rule of law and property rights.

At a global level, policies supported by the IMF and other international financial institutions like the World Bank and the World Trade Organisation (WTO) have come under increasing pressure.

In Zimbabwe, organisations like the Zimbabwe Coalition on Debt and Development (Zimcodd) have been critiquing the emphasis that structural adjustment policies (Saps) place on market interventions rather than comprehensive human-centred development.

Other critics have charged that Saps have appropriated a particular Western discourse of human rights and democracy to the effect of imposing neo-liberal economic policies that override particularities of developing countries, making human development almost impossible.

The critics have ranged from radical campaigners calling for total disengagement with the international financial institutions and other reform initiatives, arguing that these must have a thorough democratic outlook so that they become more open to make participation by civil society organisations easier.

This is in the hope that there will be policies that are focused on human development initia-tives rather than a somewhat blind emphasis on economic growth that has, this far, not always resulted in social and economic development.

The debate of other radicals has summarised the Bretton Woods policies as perpetuating “imperialist” relations that are no longer maintained by armies – at least in southern Africa – but are embedded in decision-making processes and hence the outcomes of the policies of these institutions.

These critics, at least in general, charge that the economic policies that are imposed on the developing countries in exchange for loans, more aid and preferential trade deals have become the “new colonialism”, the effect of which has been to entrench a global economy that exacerbates poverty, damage the environment and accelerates the subordination of developing economies to a global economy structure where the rich and powerful thrive while the poor are exploited and excluded.

This radical debate has become seductive to the Zanu PF government that has suddenly remembered its “anti-imperialist” credentials and has scurried for all the cover it can find to try and mobilise a limited and utopian nationalist and authoritarian response, in so doing, attempt to break the opposition that it has unsuccessfully painted as a lackey of this “new colonialism”.

In light of these critiques, it becomes important to debate under what framework Zimbabweans must engage or disengage these international financial institutions.

This debate must however be informed by a critical understanding of how globalised economic exchanges, and that the building of national, regional and a global market that works cannot be sidestepped.

A framework that campaigns and advocates disengagement or one that advocates reform face severe constraining challenges.

First, Zimbabwe is massively indebted to the IMF and secondly, its social and politico-legal framework is under severe strain to achieve what both camps would call for.

Disengagement with the IMF will mean expulsion from the IMF and with this comes the seal of international pariah status and other creditors would scrum into the line demanding that Harare pay its dues.

The second one that calls for reform and human-centred development suffers from one limiting factor which is: the influential members of the IMF, the WB and the WTO have this far seemed disinterested in aid and debt relief for Zimbabwe on the evidence of its human rights record, disregard of the rule of law and unsustainable economic policies.

Influential members of the IMF and WB like Britain, the US and Australia have imposed smart sanctions on Zimbabwe some of which make impossible the granting of aid or debt relief to Zimbabwe.

At the G8 meeting in Scotland, Zimbabwe only featured when there were discussions on how to pile pressure on Harare to recommit itself to democracy, respect and protection of human rights and the rule of law.

On September 10, I will join millions of other people across the globe urging world leaders to do more for debt-relief, increase aid and make trade fair but I shudder to think what debt-relief, more aid and fair trade would do in the Zimbabwean situation.

It would give life to a regime that has a callous disregard of human rights, has bludgeoned the judiciary, militarised the electoral processes and pursued policies that have resulted in the homelessness of its own citizens.

In Zimbabwe’s case, a sustainable deal for debt-relief and increased strategic aid can only become part of a deal that will be offered once there is a new government committed to constitutional and economic reform, democracy, human rights and the protection of private property.

It becomes therefore clear that unless and until the political questions in Zimbabwe are settled or partially resolved, various interventions on, and in Zimbabwe, will remain limited if not counteractive.

The loan by the South African government will be one such initiative that has no other effect than to sustain an embattled government that is not taking interest in urgently-needed reforms.

These cut and paste patchworks: a red patch from Beijing, a “rainbow” patch from Pretoria and a yellow patch from Beirut will never have the needed comprehensive effect of helping Zimbabweans move away from an inevitable meltdown.

The Zimbabwean meltdown has already been spilling into the southern African region, making impossible economic integration of the region and making Nepad objectives look like child’s play thus pushing further into the horizon Zimbabwe’s millennium development goals targets.

Zimbabwe’s reconstruction therefore largely depends on how political blockages being built by Zanu PF’s laager mentality are dealt with, including negotiations where possible, mass pressure if needed and international brokering which is much-needed.

*Tinashe Chimedza is a Zimbabwean at the University of Technology in Sydney, Australia.

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