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Policy clashes stymie economic reform

Conflicting views on critical policy issues in government and lack of political will over the settling of the country’s external arrears could further damage Zimbabwe’s economic prospects despite ongoing international re-engagement and reforms which seek to unlock investment and fresh capital to revive the ailing economy, analysts say.

Taurai Mangudhla

As Finance minister Patrick Chinamasa and Treasury engage multilateral lending institutions for a viable arrears clearance strategy designed to open doors for new lines of credit, confusion reigns supreme among Zanu PF hardliners who are fighting over the process.

Zimbabwe owes the three international financial institutions — International Monetary Fund (IMF), World Bank and the African Development Bank (AfDB) — US$1,8 billion in arrears. IMF is owed US$110 million, the World Bank (US$1,15 billion) and AfDB (US$601 million).


Zimbabwe’s external debt stands at US$10,8 billion (about 77% of GDP), of which US$6,8 billion is public and the rest private sector debt.

Chinamasa, who is part of a clique of reform-minded cabinet ministers, has been pushing for full implementation of the IMF recommendations — that include reducing a bloated wage bill, ensuring transparency in diamond mining and clarifying the Indigenisation Act — as means of unlocking new money.

The push for reforms and repayment of arrears is however opposed by Zanu PF hardliners who have great hostility to the Bretton Woods institutions they blame for getting developing countries like Zimbabwe into a debt trap and pushing neo-liberal or Washington Consensus-driven reforms that have wrecked poor nations’ economies.

The IMF said while Zimbabwe is on course to accessing long-term finance, more reforms are in the meantime required to steer economic growth.

“Economic conditions are unlikely to improve before the ongoing reforms start to produce their favourable impact,” said the IMF in a statement released last week.

“In the absence of a comprehensive medium-term economic reform plan that mobilises financial support from the international community, it is unlikely the country can raise its growth prospects in a lasting manner. Zimbabwe’s debt distress remains the major hurdle for achieving its development objectives.”

MDC-T spokesperson Obert Gutu said there is a snowball’s chance in hell of the Zanu PF government being able to implement reforms recommended by the IMF and clear the country’s US$1,8 billion arrears.

“You just have to refer to the acrimonious outburst by (War veterans minister) Chris Mutsvangwa against Chinamasa to appreciate the serious and deep-rooted policy discord within cabinet; particularly regarding the issue of re-engagement with the Bretton Woods institutions,” Gutu said.

“Mutsvangwa lambasted and humiliated Chinamasa; literally calling him a ‘regime change agent’. Whereas Chinamasa has certainly sobered down and smoked the peace pipe with the West, Mutsvangwa wants to style himself as a hardliner who doesn’t want government to mend its relations with the IMF,” Gutu said.

Gutu said Mutsvangwa is simply engaging in fairytales when he talks about China bankrolling the regime’s projects which is typical of some Zanu PF hardliners, while on the other hand reformists like Chinamasa have since appreciated the futility of picking unnecessary quarrels with the IMF and the World Bank.

“I can bet you my bottom dollar that because of the irreconcilable policy discord among senior members of the crumbling and bankrupt Zanu PF regime, the Zimbabwean economy will remain trapped in the present comatose state.
The status quo will prevail until such a time that (President) Robert Mugabe gets out of power,” added Gutu.

Zanu PF hardliners opposed to the reform agenda, particularly Mutsvangwa, have described Chinamasa as an “apostate” — a renegade.

Mutsvangwa said last month the Bretton Woods institutions wanted to topple Mugabe and have MDC-T leader Morgan Tsvangirai take over.

“They (IMF) want to remove President Mugabe … they want (MDC-T leader Morgan) Tsvangirai to be at the helm. We have nothing to do with IMF because their agenda is removing war veterans from influential positions in government. They want security sector reform and they want Tsvangirai to be at the helm of the government.”

In a column in a state-owned weekly this week, Mutsvangwa described Chinamasa as the “seemingly apostate minister” and accused him of behaving like an IMF spokesperson.

“Definitely his views about the IMF as expressed in his answers were not reflective of President Mugabe and his cabinet,” he said.

“Civil servants were to be culled, their paucity of wages cut. Army barracks had rations reduced to meagre sustenance, schoolchildren confined to a single meal a day; all to appease regime change politicians and their retinue usurious bankers!”

Mutsvangwa’s remarks come after Mugabe, who was also in New York recently for the United Nations General Assembly criticised the Bretton Woods institutions for their perceived rigidity, calling for an immediate overhaul including ensuring democracy in the administration of the institutions.

Youth, Indigenisation and Economic Empowerment minister Patrick Zhuwao also joined in criticisng Chinamasa, even threatening him with dismissal if he goes ahead to fire youth officers in his ministry, who make up most of the 75 000 ghost workers on the government pay roll.

“Some are saying we are going to fire youth officers. Who do you think you can fire? It might be you who will go home first. If it is an MP who is saying that, then we should go and sit down with him,” he said. “There are people going around saying that they are going to re-look the indigenisation policy, what re-look comrades, this is something for the masses. So if I go home (fired as Youth minister) then all of you will go home.”

For the anti-reformists, giving in to a structural reform agenda comes at a serious political cost as Zanu PF is looking at events with an eye on the 2018 general elections. The emergence of former vice-president Joice Mujuru — widely seen as commanding a large constituency in and out of Zanu PF — has opened the race as age takes its toll on Mugabe who will be 94 in 2018 while main opposition leader Morgan Tsvangirai’s social base has been eroded by his party’s endless splits and infighting.

Political commentators also say far-reaching reforms that include cutting public spending to 40% from over 80%, which can be realistically be done through lay-offs in the civil service, could be a big blow to Mugabe’s patronage system besides it being an admission of failure by a government which promised to create 2,2 million jobs between 2013 and 2018.

The Youth ministry employs at least five youth officers in each of the country’s 1 200 wards although they have no job description. They gobble about US$2,5 million in salaries every month.

Clearly, with an eye on 2018, Zhuwao insists the youths, who play a critical role in campaigning for Zanu PF during elections, will not be laid off.

Chinamasa, who is driving government’s re-engagement process including successive Staff-Monitored Programmes (SMP), is pushing an agreed cabinet position, while some of his counterparts clearly have reservations. This raises questions on whether Mugabe’s Zanu PF will be able to balance its political interests, which are key to its continued hold on power, and economic interests that will benefit the nation which has potential for growth, employment creation and improving livelihoods.

Independent Harare–based economist John Robertson said Zimbabwe does not only find itself in a tricky situation where it has to borrow its way out of debt, but deal with internal discord in government.

“We are left with a difficult problem which is that our leaders are not able to sort out their priorities and manage their political and economic interests properly,” said Robertson in an interview.

He said politicians seem not to be bothered about what political rhetoric on debt management and reform implementation costs the nation.

“There is a very serious policy conflict in government which is difficult to resolve,” Robertson added.
Political analyst Vince Musewe said Zimbabwe’s problems are systemic. Things such as policy discord and lack of consensus in government are due to institutional failure, he said.

He also said reaching a consensus and clearing arrears alone will not change the fortunes of Zimbabwe.

Musewe said the country needs to take measures that ensure self-sustainability and stop depending on external support.

“There will be temporary respite, yes, but there will be no fundamental structural economic change. Our only sustainable solution is in rapid industrialisation which requires long-term capital and that will not come until we shift our dependence paradigm from the IMF,” said Musewe, adding, “We must realise that without a value proposition to investors nothing will change.”

Last week, Chinamasa and Reserve Bank of Zimbabwe governor John Mangudya’s strategy to clear US$1,8 billion in arrears owed to the IMF, World Bank and AfDB was accepted by the lending institutions on the sidelines of the World Bank annual meetings in Lima, Peru. The strategy is said to be anchored on the recovery agenda announced in Mugabe’s 10-point plan which, among other issues, calls for labour reforms and strategies to unlock FDI inflows, and will utilise the country’s special drawing rights and a comprehensive country finance programme under the AfDB, IMF and the World Bank.

Analysts say reducing public spending to 40% from over 80% would be a big blow to Mugabe’s cronyism and patronage system, which has been key to his 35-year rule.

Mugabe, who has traditionally been anti-IMF reforms, last year increased the civil service salaries by 14% despite Chinamasa’s calls to cut the wage bill which now gobbles above 83% of government revenues, further showing policy discord in the corridors of power.

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