THE annual International Monetary Fund and World Bank meetings will be held in Tokyo, Japan, this weekend, according to the hosts, amid uncertainty facing the global economy.
Report by Itai Masuku
On the economic front, the global uncertainties stem from the recession which peaked in 2008. Although it may not have equated to the great depression of the 1930s, it certainly got many of the world’s economists, business and political leaders thinking: “Hey, if this could happen in the 21st Century, what could happen next?”
The assumption, of course, being that in the 1930s, people were less prepared to deal with such developments, but in high-tech C21, advanced economic modelling could anticipate such downswings, unlike the disputed Kondratiev theory on economic boom and bust, and allow preventive steps to be taken.
On the political front, the ghost of 9/11 in the US continues to haunt the world, with the US becoming more militarily aggressive by engaging in pre-emptive strikes against perpetrators of terrorism, perceived or real.
This has resulted in an unfolding new world order (I hate that phrase), characterised by Anglo-American-led unilateralism. It is this that has seen the political disintegration of the Arab regional economic hub whose impact is yet to be fully understood.
It is not clear whether this is to be followed by similar fall-outs in Asia and Latin America.
Backwater Africa is never really part of the equation, except insofar as its resource endowments are in the interest of the world’s major players. Conspiracy theorists believe it’s part of a wider plot to impose a global economic order that sustains south-north economic prosperity.
Back to Tokyo. Zimbabwe, of course, will be represented by its Finance minister Tendai Biti and Reserve Bank governor Gideon Gono, who will compare notes with their counterparts from all over the world. We understand that the state of Zimbabwe’s economy will attract some attention at the meet.
The country has enjoyed a love-hate relationship with the IMF stemming from its failure to repay arrears and controversial land reform programme in 2000. The IMF argues this has disrupted agriculture, traditionally the backbone of the country’s economy, and therefore its ability to settle accounts with the IMF.
Zimbabwe’s debt is reported to be US$10,7 billion and last month the world’s lender-of-last-resort said it would not cancel any portion of it. The Fund listed Zimbabwe, along with countries such as Somalia and Sudan, as failing to service its debts.
Biti and Gono therefore go to the meeting with their tails between their legs following the Fund’s snubbing of their request for debt clemency. However, a window of opportunity still remains, the Heavily Indebted Poor Countries (HIPC) route, which some authorities abhor.
They argue HIPC conditions will place it at the mercy of the IMF. Unfortunately, that’s what happens when you default with creditors.
Unless Zimbabwe comes up with its own Marshall Plan to resuscitate its economy, which must include accounting for its diamond revenues, it is less likely to come up with a debt repayment strategy that meets the expectations of its creditor. This has implications on this country’s voting rights and access to further WB and IMF funding.