Miraculous economic recovery is a fallacy

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The International Monetary Fund (IMF) issued a Regional Economic Outlook on Wednesday this week and the numbers for Zimbabwe show that, despite the excited chatter about a miraculous recovery, the country is far from leaving the intensive care unit.

Candid Comment,Brezhnev Malaba
bmalaba@zimind.co.zw

There are various ways of looking at the economic imbroglio, but one useful metric — the level of our import cover — tells the story of a million words. Zimbabwe has 15 days’ cover, reflecting the dangerously precarious state of our balance of payments situation. Comparatively, our neighbour Botswana has 15 months’ cover. The difference reveals the gulf that exists between the refreshing way in which Gaborone handles its economic affairs and the shocking manner in which Harare has vandalised the national economy. And yet Botswana is almost entirely dependent on a single mineral — diamonds — while Zimbabwe has more than 40 minerals including the world’s second largest commercially proven platinum deposits. Import cover, a reliable trade-based indicator of reserve adequacy, is a good way of ascertaining the health of an economy.

It must worry us that even countries emerging from devastating civil wars have better import cover than Zimbabwe.

Another vital metric to look out for is the extent of Zimbabwe’s public debt, which has ballooned beyond US$18 billion, according to fact-checking platform ZimFact. The IMF says that at the end of last year, six countries — Chad, Eritrea, Mozambique, Congo Republic, South Sudan and Zimbabwe — were judged to be in debt distress. There are no prizes for guessing why Zimbabwe is on this list. Although the recent change in political leadership in Zimbabwe has generated considerable optimism, the economic situation on the ground has not improved at all. If anything, there has been a deterioration in the general quality of life as shown by the escalating prices of basic commodities, a considerable increase in poverty levels, the unabated collapse of troubled companies, the rise in unemployment and the sense suffocating of hopelessness among the urban poor.

The IMF’s regional outlook report confirms what we have been saying all along: despite all the misplaced hype, there is in fact no miraculous economic rebound in Zimbabwe. We should claim no easy victories. In the aftermath of the coup which ousted Robert Mugabe, there were great expectations that the political changes could create opportunities for stronger economic outcomes. But in reality this has not materialised.

Numbers don’t lie. Let’s look at another set of figures contained in the IMF report. Finance minister Patrick Chinamasa’s projected 4,5% economic growth for 2018 comes across as rather unrealistic when compared to the Bretton Woods institution’s modest 2,4% estimate. To think that the minister has even entertained the prospect of breaching the 6% mark.

There are many reasons why Zimbabwe will find it difficult to achieve meaningful economic growth in the short term, apart from well-documented structural bottlenecks. Runaway spending is the elephant in the room. We have a catastrophic deficit but, shockingly, the Zanu PF manifesto does not even acknowledge this.

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