HomeLocal NewsZanu PF infighting sinks Lima Plan

Zanu PF infighting sinks Lima Plan

ZANU PF’s succession power struggles — coupled with lack of meaningful political and economic reforms and a strong opposition lobby — are scuttling government’s re-engagement process with the international community. The infighting is also sabotaging the US$1,8 billion arrears clearance plan proposed to international financial institutions (IFIs) amid concerns this could plunge the floundering economy deeper into the doldrums.

By Benard Mpofu/Elias Mambo

As the internal strife within the ruling party intensifies with two rival factions positioning themselves to produce a successor to succeed President Robert Mugabe, 92, the country’s debt strategy is collapsing under the weight of Zanu PF factionalism and attendant wrangling.

Mugabe is grappling with a prolonged economic crisis, compounded by a US$10,8 billion debt, deflation, high levels of unemployment and a severe cash crunch, threatening his political survival.

Sources familiar with the developments said Zimbabwe’s arrears clearance plan first proposed in Lima, Peru, last October is facing growing resistance from Zanu PF’s G40 faction, a group of officials coalescing around First Lady Grace Mugabe.

The faction headed by Vice-President Emmerson Mnangagwa is supporting the plan and a raft of reforms proposed by Finance minister Patrick Chinamasa to the IFIs. The reforms are seen as a prerequisite for unlocking a US$2 billion financial package.

“Zanu PF infighting politics is making it difficult for IFIs to proffer sound advice and support to government lest they be interpreted as propping one group. It’s really difficult for them to push for strong reforms that are urgently required,” a source said.

Sources said while government has committed to bold reforms, the cabinet committee on economics and finance which met on August 15 has given Chinamasa little room to manoeuvre.

Government has committed to the International Monetary Fund (IMF), under the Staff-Monitored Programme, to embark on a raft of reforms before full re-engagement with the multilateral lender.

“In a high-level meeting held recently the committee approved reforms relating to public spending, taxation system and public finance management. But issues to do with human rights, property rights and the indigenisation policy were not entertained,” the source said.

In July, British ambassador to Zimbabwe Catriona Laing wrote a letter to Chinamasa demanding Harare must uphold humanrights, good governance and rule of law, and economic reforms if it wants the bailout.

Laing is said to be supporting the Lima Plan, despite her recent disapproving remarks anda warning that if the current political unrest and crackdown on the opposition continue the expected new money would not be coming.

The debt-ridden country has also committed to compensate white commercial farmers who lost land during the chaotic land reform programme.

Zimbabwe has further failed to come up with viable strategies for the reform of state enterprises which are currently haemorrhaging the cash-strapped Treasury.

While the IMF has welcomed the Staff-Monitored Programme reforms and the arrears clearance plan, which initially received broad support internationally, government has been unable to come up with new development plans and private sector-led growth initiatives.

Some of the outstanding benchmarks for reforms include reducing the size of the wage bill to re-orient spending towards priority capital and social outlays; improving debt management; developing a comprehensive public financial management strategy; and strengthening value-added tax policy and key processes in revenue administration; and improving the business environment, including a transparent and consistent application of the indigenisation policy and a new comprehensive land reform programme.

In July, IMF director of communications Gerry Rice said while Zimbabwe has shown commitment in reforming, the multilateral lender had not come up with any rescue package for the debt-ridden country.

“The first thing I’d say is there’s no financing programme under discussion with Zimbabwe at this point. However, the authorities have announced a plan to clear their arrears with the Fund and with other international institutions as part of their re-engagement with the international community. So the way this would work is that once the arrears are cleared and, again, they have not been, but once the arrears are cleared and our board would approve the normalisation of relations with Zimbabwe, any request from the authorities for financing would then be considered,” Rice said.

“And again, as is normal for the Fund and would be true also in this case, we need a couple of things to be in place before even that consideration can take place, which is, one, design of some economic policies to ensure that the structural imbalances are meaningfully addressed, and, two, obtaining financing assurances regarding Zimbabwe’s ability to service and sustain its debt.

“So I think what I’d say on this is that irrespective of the calendar for arrears clearance, the economy needs immediate reforms to address the vulnerabilities that have come to the fore. We think expeditious implementation of those reforms is critical to reverse Zimbabwe’s economic decline and in the process of course protect the most vulnerable segments of the population. We stand ready to help with that implementation as usual.”

This was apparently in reaction to Chinamasa’s repeated claims of late that the Lima Plan was almost a deal done even though it is now falling apart.

The arrears clearance strategy, the Lima Plan, which seeks to settle US$1,8 billion arrears to preferred IFIs to allow Zimbabwe to access US$2 billion in new funding, has also come under threat — with some lobbyists already pronouncing it dead in the water — as authorities fight a fierce battle with a strong lobby against it.

The lobby, which includes influential diplomats, politicians, civil society leaders and thought leaders, argue funding Mugabe’s regime at such a critical moment would be a great betrayal of the broad pro-democracy movement and those fighting for change in Zimbabwe.

The lobbyists — led by former Finance minister Tendai Biti — say they remain gravely concerned about the economic and political situation in Zimbabwe, including human rights issues.

They say financial restrictions and other measures imposed on Zimbabwe due to diplomatic and policy clashes as well as repeated elections theft and human rights abuses must remain in place to pressure Harare to reform.

The lobbyists also say it would be counterproductive for the West, particularly Britain, and IFIs to subsidise and revive Mugabe’s collapsing authoritarian regime at a time when the country is sliding back to brutal repression and economic chaos.

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