YESTERDAY Zimbabwe woke up to refreshing news from the International Monetary Fund (IMF). The global lender predicted that gross domestic product (GDP) would rise by 6% this year, which is a marked recovery following a 4% slide in 2020.
This was the second time within a week that global lenders have given Finance minister Mthuli Ncube’s reforms the thumbs up. Last week, the World Bank (WB) predicted that GDP would climb by almost 4% in 2021. Most importantly, the forecasts came from independent institutions that are easy to believe. After misleading people for decades, they have lost confidence in numbers produced locally.
This is how bad mistrust has crept in, which requires President Emmerson Mnangagwa’s government to work around the clock and rebuild its soiled brand. But it is important to note that the IMF warned that for Zimbabwe to rise up 6% this year, several issues have to be addressed.
How Mnangagwa will handle the Covid-19 pandemic, for instance, will have a huge say over the pace of recovery.
Sadly, while Zimbabwe got off to a good start in its vaccination campaign, it has recently run out of steam after running short of drugs. This presents a huge threat to the health of the economy and that of people. A stronger vaccination programme helps Zimbabwe reduce infection rates and avoid costly and unbudgeted expenditure should a third wave strike.
As the IMF pointed out, Zimbabwe has created the building blocks on which to rise. But uncertainty remains high and the outlook will depend on the pandemic’s evolution. Equally important would be how Zimbabwe handles potentially dire offshoots of its failure to stabilise the free falling currency, which has recently taken a huge beating on the parallel market.
Prices have shot up by 40% since the government made bizarre threats to punish businesses through Statutory Instrument (SI) 127 of 2021 a few weeks ago. This will work against plans to place inflation under a tight leash and reduce it to less than 10% by December.
Zimbabwe will be hit by another inflationary surge, but authorities will deny that the situation is deteriorating.
Zimbabwe will need to intensify efforts to stabilise the currency — a source of macro-economic instability for over two decades.
Ncube has a big task ahead.
He must put in place structural reforms that will eliminate the string of hurdles that has held back investment and pushed local firms to the brink.
The hurdles include high taxes and costs, as well as hostile actions such as those announced under SI 127 of 2021.
Zimbabwe has been yearning for stability for years.
Authorities must not relax because the IMF has indicated that economic recovery is possible this year.
They must not select what they want to hear from the IMF’s report and feed the nation with half-baked propaganda.
The IMF’s report must be read in its entirety and each concern solved, in order to help this country cool off the jitters and once again embark on real turnaround.