THE local economic crisis, which continues to deepen, amid currency volatility in the market, is intricately linked to the country’s long-standing political chaos, an International Monetary Fund (IMF) official has said.
By Kudzai Kuwaza
The economic situation in the country has been characterised by a debilitating liquidity crunch, foreign currency shortages, rising inflation, spiralling basic commodity prices, erosion of disposable incomes, power outages and low productivity.
Government has engaged the Bretton Woods Institution and recently finalised a Staff Monitored Programme (SMP) for the country, focussed towards extinguishing the country’s gargantuan debt of US$18,6 billion and accessing new lines of credit from international financial institutions.
Speaking at the Southern African Political Economic Series dialogue in Harare yesterday, IMF representative to Zimbabwe Patrick Imam pointed out that the crisis bedevilling the economy is tied to the country’s politics. “The fundamental problem in Zimbabwe is political not economics,” Imam said.
“The economy reflects the underlying political problems. It is the same with currency. It is a symptom of the underlying problem, but it is not the problem itself. The underlying problem is the politics of the country.”
He said the restructuring of the country’s debt to international financial institutions such as the World Bank (WB) and the African Development Bank (AfDB) by next year relies on government embracing sweeping political and economic reforms simultaneously. “The key to really unlocking the situation in Zimbabwe is to have the debt clearance next year, assuming everything goes well on the political and economic front,” Imam said.
The IMF representative to Zimbabwe said he believes the government is genuine in wanting to carry out reforms. He pointed out that although the year 2019 would be gloomy for the generality of Zimbabweans, the outlook next year is going to be brighter. Asked where they drew the line between a sovereign and a rogue government, Imam said the government is recognised internationally and was declared legitimate by the country’s Constitutional Court after the opposition MDC protested the July 30, 2018 election results. He said in the next two years, government will have to focus on stabilising the economy and warned that the stabilisation period will be painful. Imam said the addressing of deeper structural issues such as corruption will not be resolved overnight.
Economist Godfrey Kanyenze said the economic crisis in Zimbabwe is as result of factionalism, centralisation of power, conflation between the party and state and the culture of entitlement in the Zanu PF government. He said there were divisions within government over monetary and fiscal reforms amid growing militarisation of the state. Kanyenze warned that the SMP will be rendered futile if political issues such as factionalisation and militarisation of the state are not resolved.
“These are issues that we cannot just sweep under the carpet and just assume that a technical programme such as the SMP can just come in and within 11 months, Eureka! Everything falls into place. The real world does not work like that,” he said.
The solution to the country’s problems, Kanyenze said, lies in political dialogue that addresses legacy issues, which have resulted in bitterness among Zimbabweans.
Economist Tony Hawkins also said at the meeting that the populist policies have contributed to the parlous state of the economy. “We have to ask the question, how much longer, how much more pain can the public suffer and how much respite are they getting from cutting the price of bus rides or cutting the price of food supplies by loss making organisations?” Hawkins said.
Hawkins expressed concern that the budget presented by Finance minister Mthuli Ncube “has been amended out of all recognition” and has not been taken to parliament as demanded by the country’s constitution.