Economic Recovery Document Exposes Food Insecurity

A GOVERNMENT economic recovery plan proposed for the yet-to-be formed new inclusive government between President Robert Mugabe and leaders of the Movement for Democratic Change (MDC) formations — Morgan Tsvangirai and Arthur Mutambara — has revealed that at least 8,2 million people of the estimated 12 million population are in dire need of food aid.

According to a draft, short to medium term economic blueprint, The Proposed Economic Recovery Package for Zimbabwe, government now requires donor support to import at least 900 000 tonnes of maize and an additional 150 000 tonnes of wheat in an emergency rescue package that seeks to provide food aid to more than half of the population facing starvation.

With the agricultural sector producing below national consumption on the back of ill-advised policies and acute shortages of inputs, government now requires an estimated US$648 million from international financiers to procure inputs under the “Self Financing Farming” programme.

“The decline in agricultural production during the last farming season, largely due to the adverse weather conditions, has left an estimated 8,2 million people in both rural and urban areas being food insecure,” reads the document.

The new figure is however more than the United Nations (UN) estimates of five million people.

“The extent of this year’s food deficit, however, requires further support towards augmenting government efforts to mobilise external resources, as well as the logistics to bring in an additional 150 000 tonnes of wheat imports in the country,” the report read.

The 106-page document comes barely three weeks after the government denied a team of world leaders — former UN secretary-general Kofi Annan, ex-United States President Jimmy Carter and Graca Machel, wife of former South African President Nelson Mandela, entry into the country to assess the topsy-turvy economic and humanitarian crises.

The recovery plan also seeks to tame runaway annual inflation now over 231 million percent through a “credible and comprehensive” dis-inflation programme that ceases money supply growth despite warning that this would result in government cutting expenditure on subsidies.

This year, government relied heavily on the Reserve Bank to print money in order to finance quasi-fiscal activities for farmers and other loss-making parastatals.

The dis-inflation measures, according to the proposal, targets double digit levels by next December and single digit a year later.

“In this regard, it is imperative that the dis-inflation programme puts in place a fiscal and monetary policy framework with measures to immediately arrest money supply growth and progressively reduce it to levels consistent with low and stable inflation,” read the draft.

The recovery programme, which the government said would require “sacrifice and endurance of pain”, also proposes the withdrawal of expenditure on subsidies, which critics have blamed for paralysing public entities and parastatals.

Government, the report further stated, would also require at least US$900 million to resuscitate low-performing manufacturing sector to at least 80% capacity utilisation from current levels estimated at 10%. Analysts however doubt the current government’s capacity to generate the funds against the backdrop of declining export growth.

Turning to foreign exchange, the draft planned proposed an “implicitly managed” floating exchange rate that is underpinned by fiscal and monetary austerity. Currently the country’s foreign exchange control regulations are governed by the interbank rate that has been widely criticised by exporters and tobacco farmers.

Government according to the document also proposed to widen revenue collection by widening the tax base to cover the thriving informal sector understood to be evading tax.

The rescue package, which came three months after the signing of the September 15 power-sharing deal, also underscored the re-engagement of external financiers to bankroll the government.

BY BERNARD MPOFU