The Sunday Mail
While Zimbabwe was gladly receiving the IMF delegation a couple of weeks ago, Ghana was sadly mulling cutting ties with the multi-lateral lender.
Well, Ghana’s president John Mahama has since indicated that his country is indeed not going to renew its engagement with the IMF or get engaged with the Bretton Woods for any form of financial assistance.
CAJ News, which reported the story, had this to say: “Several African countries have over the years complained that the international lending institutions were not fair in their dealings with third world countries. It is said the Bretton Woods institutions were acting as appendages of the United States as tools to re-oppress poor and developing nations.”
Off with that for a while.
The IMF delegation came to Zimbabwe recently. Undeniably, they managed to parade the who-is-who in the economy of Zimbabwe, in their quest to do their book-keeping on the Staff-Monitored Programme.
By the way, an SMP, they say, is an informal agreement between country authorities and IMF staff to monitor implementation of the country’s economic programme.
Hence, they have just monitored us!
And the results are quite impressive!
So, Zimbabwe has successfully met all the quantitative targets and structural reforms of the IMF’s Staff-Monitored Programme. Bravo!
So, Zimbabwe has already failed to meet some of the Zim-Asset targets. Take the 2014 economic growth projection, for instance, which has since been slashed from 6,1 percent to 3,1 percent.
How ironic!
They say this is Zimbabwe’s first IMF agreement in more than a decade, just as Zim-Asset is Zanu-PF’s first economic blueprint in six years, if we are to leave out those crafted during the inclusive Government era.
The last economic policy from Zanu-PF as a ruling party was the National Economic Development Priority Programme in 2007.
Zimbabwe apparently thinks successful implementation of the SMP will result in the country getting loans, if words of the Head of Zimbabwe Aid and Debt Management Office, Mr Andrew Bvumbe, are anything to go by.
He was quoted in May saying: “If we want to get lines of credit, we have to implement the International Monetary Fund’s Staff-Monitored Programme.”
The IMF says otherwise.
In their Press release of June 13, 2013, the Fund was blunt: “SMPs do not entail financial assistance or endorsement by the IMF executive board.”
So, if it’s not about financial assistance or endorsement, then it’s perhaps about having fun. Ayoba!
Is the IMF even pulling in the same direction with us at all, or they have their own destination they want to take us to?
Take, for instance, when this newspaper interviewed the IMF head of delegation, Mr Domenico Fanezzi, a couple of weeks ago.
He was asked what he thinks Zimbabwe should do to deal with the high civil service wage bill. His response was that Government has to “rationalise employment”, arguing that “20 percent of GDP is too much (to put) into wages”.
This is contrary to what Finance and Economic Development Minister Patrick Chinamasa said in the National Assembly in January, and in the National Budget, too, that: “I will not put my signature to retrench the civil service in order to cut the salary bill. We must grow the economy so that the economy gets bigger and the budget also gets bigger.”
Who, between the two, is the guardian angel? And who is the angel of death?
To me, cutting the civil service workforce is simply anti-Zim Asset. It is not in line with the goal of creating 2,2 million jobs. Most Government departments are already under-staffed anyway.
Workers there are overstretched by the current workload, and will be distressed if this workload is to be increased.
The situation of workers, including those in the civil service, was captured well by a recent survey conducted by Industrial Psychology Consultants.
Titled “Distress and Other Mental Health Problems in the Zimbabwean Working Population”, the study says 43 percent of Zimbabwe’s workforce experiences symptoms of distress.
The report further says that “27.3 percent of the working population is experiencing depression symptoms namely feeling that things are meaningless and they can’t see a way of escaping from their situation, life is not worthwhile, they would be better if they were dead, they can’t enjoy anything anymore, wishing they were dead”.
Let us also forget not that Government cannot recruit more employees due to the recruitment freeze put in place in 2012.
Can someone correct me here!
Do we deal with the debt problem by sweating to meet the targets of the SMP, or by striving to implement our very own Zimbabwe Accelerated Re-engagement Economic Programme and the Zimbabwe Accelerated Debt and Development Strategy?
Some of our folk seem to have forgotten the reality of sanctions in the context of trying to clean ourselves with the hope of rekindling our romance with the Bretton Woods institutions.
Who will forget that clause in America’s Zimbabwe Democracy and Economic Recovery Act? I mean the clause that says that the US treasury secretary will instruct American officers at multi-lateral institutions to oppose and vote against any extension of any credit or guarantee to the Government of Zimbabwe or any cancellation or reduction of indebtedness owed by the Government of Zimbabwe.
When we understand the IMF’s voting architecture, we will have an appreciation of the impact of these sanctions.
Unlike the General Assembly of the United Nations where each country has one vote, decision-making of the IMF is designed to reflect the relative positions of its member countries in the global economy.
Thus, countries have different amounts of voting quotas. On top of that, Article XII, Section 5c of the IMF says: “All decisions shall be made by a majority of the votes cast.”
Let’s do the mathematics here.
America holds the highest quota of voting rights at 16 percent, while Germany, France and the United Kingdom hold a cumulative 14 percent. Put together, that makes 30 percent.
This coterie will not have problems garnering a majority to vote against Zimbabwe at any given time.
Where does that leave us after we have “cleaned” ourselves? It must be noted that I am not advocating keeping our debt as is, as shall be articulated in my closing.
It must be also noted that this is not our first encounter with the IMF, where we are given a set of targets in return for promises of money – lest we forget.
Who forgets the Economic Structural Adjustment Programme, a briefcase economic programme given to Zimbabwe at the of the 1990s?
Under ESAP, Government was to open up markets, privatise some parastatals, liberalise trade, labour and financial markets, while price controls and subsidies were abolished, amongst a catalogue of other quantitative targets and structural reforms.
We all know the results, how ESAP failed dismally.
Economic growth declined from averages of 4,2 per annum between 1980 and 1990 to average 2,8 percent between 1991 and 1996. Inflation also rose from averages of 12 percent to 26,6 percent during the same period. Employment growth slowed down, with the contributions of mining, agriculture and manufacturing to GDP also falling.
So much for the IMF’s wisdom!
Years after implementation of structural adjustment programmes, the World Bank professed that the results in developing countries were unsatisfactory.
In reports titled “Economic Growth in the 1990s” (2005) and “The Growth Report” (2008), the World Bank highlighted the need to desist from “one-size-fits-all” blueprints and to ensure policy diversity while taking a careful experimental case-by-case approach and recognising the need to deal with the “most binding constraints” on growth rather than a long catalogue of reforms.
What is pleasing to note, in contrast, is that countries that did not heed IMF’s advice during that time, such as the Asian Tigers, experienced sustained growth over the same period.
These relied heavily on trade protection, export subsidies, tax incentives, tolerated moderately high inflation, high expenditure on education and training, inter alia – the very opposite of IMF’s prescription.
While it is sounds just about “okay” to re-engage with the multi-lateral institutions, it is my strong view that real money lies in having bi-lateral relations with friendly countries with a view to accessing the much-needed foreign investment.
If Zimbabwe can sign deals worth billions of dollars with a couple of countries in a period of less than a month, how much more can it do in, say, 12 months?
How about come 2018?
