Desperate Zimbabwe out of financial options amid Covid-19

The country is largely being ignored by international funders due to its past bad record of repayment and governance failures

Zimbabwe is in the grips of its worst food crisis in four decades with close to half of its population facing hunger in 2020. Picture: REUTERS/PHILIMON BULAWAYO

On April 2, Zimbabwean finance minister Mthuli Ncube wrote to the International Monetary Fund (IMF) and other leading multilateral lenders pleading for help.

More than half the population needs food aid; the economy collapsed even before the impact of the global coronavirus pandemic; and the country’s health service is in tatters, he said. To date, he’s had no response.

Zimbabwe’s plight highlights the dilemma that global lenders face. At a time when Covid-19 and its associated economic effect threaten illness, unemployment and starvation across much of the developing world, the IMF has barred from its relief programme countries that haven’t kept up with their payments.

“If you look at all the countries, they are arguably the most ill-equipped to deal with the Covid-19 outbreak,” said Jee-A van der Linde, an analyst at NKC African Economics in SA. “My heart goes out to them. The people shouldn’t be held accountable.”

As early as March, the IMF said it would make $50bn available to low-income and emerging economies to help mitigate the impact of the outbreak. While Zimbabwe has cleared its arrears to the IMF, it still owes $8bn to foreign creditors, including the World Bank and African Development Bank (AfDB).

Ncube addressed his letter to the heads of the IMF, the World Bank, the European Investment Bank, the Paris Club of creditors and the AfDB. While his country has just 34 confirmed coronavirus cases, it has only managed to carry out 920 tests and a lockdown has brought its economy to a standstill.

He admitted policy errors and promised measures ranging from electoral reforms to a market-related exchange rate if the organisations would agree to reschedule the payment of arrears and allow it to access fresh finance.

Still, these promises have been made before and haven’t been honored. In a staff report earlier this year, the IMF criticised everything from Zimbabwe’s reluctance to crack down on corruption to a failed currency policy. Still, it said the country would need hundreds of millions of dollars in donor money to avoid “a deep humanitarian crisis”.

The Paris Club declined to comment. The other organisations didn’t respond to requests for comment.

Corruption, migration

A senior official at one multilateral organisation said the groups are reluctant to help Zimbabwe because they aren’t confident that aid won’t end up in the hands of the country’s elite, rather than the people who need it. He asked not to be identified as public comments haven’t been made about Ncube’s request.

Officials in Zimbabwe’s finance ministry and presidency didn’t respond to requests for comment. George Guvamatanga, the director-general in the finance ministry, said earlier that it was unfair to expect Zimbabwe to deal with the consequences of a pandemic it didn’t cause.

Zimbabwe’s relations with its creditors have soured over the past two decades. It narrowly escaped being expelled from the IMF in 2006 for non-payment of arrears and a series of irregular and violent elections, along with erratic economic policy, that have frustrated attempts at finding a solution.

The country’s agricultural and manufacturing industries have collapsed, and the government has, at times ,been unable to pay doctors and teachers, and millions of its citizens have migrated.

For those who are left, there is little hope of help from abroad or from their own government.

“The blockage on funding is wholly the fault of the Zimbabwean government,” said Derek Matyszak, an independent governance consultant in Harare. “There is no back up for the people who cannot work during the Covid-19 crisis. The government is unable to absorb any shocks like Covid-19 or natural disasters.”

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