The visit by an IMF review mission that came to an end recently was no different. Despite the palpable failure of the Government to meet its fiscal and monetary targets and its obligations to make the Indigenisation Laws more acceptable to investors, the Fund has declared that Zimbabwe has met its targets and they will now move onto the next stage in this process.
The next stage is an exercise agreed during the Lima meetings of the Fund in September/October 2015 and involves the clearance of the accumulated arrears on loans extended to Zimbabwe by the multilateral agencies of the IMF, World Bank and the African Development Bank amounting to $1,7 billion. What this involves is the ADB taking over the arrears and converting them into a single, new long term debt. Zimbabwe will make a small contribution from its stock of IMF funds carried over from the era of the GNU. The exercise will not alter Zimbabweâ€™s total indebtedness to its creditors but will eliminate the arrears to the multilateral agencies and reschedule a part of the Debt.
This process, although cosmetic, will then open the door to the next stage in the reengagement process. This involves the main Board of the Fund, meeting in Washington in May 2016, deciding on the conditions Zimbabwe must satisfy in order to become eligible for debt rescheduling and cancellation and the resumption of normal operational conditions in regard to relations with the multilaterals and global financial markets.
The stakes could not be higher; Zimbabwe desperately needs a massive injection of new funds to support its recovery from nearly 4 decades of bad government and poor policies. Zimbabweans are poorer than they were in 1980 and Zimbabwe, once a regional economic hub, has now got an economy which struggles to compete with its smaller neighbors.
But what the IMF is not doing is being brutally honest with Zimbabwe. They continue to make the false claim that the economy is growing when it is patently obvious to all that another economic collapse is underway. They also falsely claim that the Country has met its targets under the SMP â€“ already so low as to be laughable, when it is clear to all that we are spending more than we can afford and staff costs in the Civil Service now exceed the gross income of the State.
But it is also time that the Fund made it clear to everyone what are going to be the new conditions that the Fund Board will demand from us when they meet in May this year. To get Zimbabwe back on its feet the following are the main issues:
- They must demand that we deal with all impediments to economic recovery and growth. Unless we can resume economic growth there is no point in debt relief or rescheduling.
- They must demand that we respect property rights and contractual obligations within the Law.
- They must demand that any future elections in Zimbabwe must be internationally supervised and meet the conditions that apply to such activities.
- They must demand that the Government of Zimbabwe respect the human and political rights of all Zimbabweans.
- They must demand the full implementation of the new Constitution and the restoration of the rule of law in its widest sense.
It is time that the international Community draws a clear line in the sand and makes it clear what Zimbabwe has to do to resume its membership of the global community of nations. Zimbabweans have suffered for too long under a regime that has consistently denied them their most basic rights and destroyed the economy through bad governance and corruption. The IMF has the obligation to make it clear that the reengagement process will not abuse this process.Post published in: Featured