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The IMF Decision
Last Friday the IMF Board met in Washington DC to decide on the future
of
the membership of Zimbabwe. We have been a member and a shareholder for
many
years and in fact have had a number of IMF sponsored stabilization
programmes during this time. In all its history the IMF has only
expelled
from its ranks one other country and that was in the mid 50's. To get
expulsion through, the Board has to first make the recommendation for
expulsion and then has to secure 85 per cent of its membership votes to
endorse the recommendation before expulsion becomes a reality.
So it's not easy to expel a member - especially if they can rely on a
block
of States like Africa plus a handful of other maverick countries that
will
support the retention of Zimbabwe as a member - no matter how
delinquent.
What are the reasons for the decision of the IMF to consider it's
ultimate
penalty? The most obvious is the fact that we are not servicing our
debt to
the Fund. Last week we were in fact some US$300 million in arrears and
had
only been making token payments for a year or so. But we owe everyone
money - PTC owes over US$100 million to its service providers, ZESA
owes
money to those who supply us with equipment and spare parts and
electricity,
GMB owes money on food imports, Noczim owes money to oil suppliers
across
the world.
We have an official external debt of over US$5 thousand million - none
of
this is being serviced and no payments have been made to other key
multilateral institutions - the World Bank is owed money, the African
Development Bank is owed money - perhaps more than the IMF in arrears.
So
why is the IMF debt so important? The reality is that it is not that
important. Paying our arrears to the Fund would not change our status
one
iota - we could not expect IMF support for any sort of stabilization
programme for some considerable time after the issue of the arrears has
been
dealt with and a workable recovery programme put in place.
No, the reason why the IMF threat was finally treated with such
deference is
mainly political. African leaders - struggling with their image abroad
and
with economic and financial problems at home, did not want to see an
African
State expelled for misbehavior. South Africa gave impetus to this view
when
they offered to settle the arrears themselves to avoid our expulsion.
To some extent the issue is also all about the fact that the Fund is
the
ultimate Bankers Banker. A decision to expel Zimbabwe would have
formally
confirmed our status across the world as a pariah State. It would have
closed doors to us in virtually every corner of the world when it came
to
commercial lines of credit and other forms of financial assistance. It
would
have damaged NEPAD and struck a blow against the reputation of other
African
States whose position is only marginally better than that of Zimbabwe.
Who
would be next, many countries would ask?
In fact the arrears were not the major issue on the IMF agenda in terms
of
its relationship with Zimbabwe. What was the real issue was quite
simply the
failure by the Zimbabwe leadership to get to grips with the problems
that
had resulted in the almost total isolation of the country
diplomatically and
the near total collapse of the economy. During successive visits to the
country, the IMF team has asked local Zimbabweans "how do you carry on
under
these circumstances?" They looked at the statistics and were astonished
that
we were still functioning.
We also wonder how we survive - and obviously this is both an
achievement
and a failure, because allowing the whole pack of cards to collapse
might
have brought change sooner than it will do in the near future.
And so we have the specter of the Zanu PF regime contradicting itself
with
respect to the IMF issue. One minute they do not matter and can "go to
hell"
. The next we are scouring the country for our last remaining sources
of
foreign exchange to make a meaningless payment to the Fund which will
ensure
that we are not expelled but are then left with insufficient resources
to
import essentials like food.
Just speculate with me for a moment on what the Fund might demand in a
wish
list to the Zimbabwe authorities in order to restore our status as a
functioning and welcome member of the Fund. My own list would
incorporate
the following: -
¨ Zimbabwe must make take steps to end its diplomatic
and
political isolation and to restore democratic credentials to its
government.
¨ Zimbabwe must respect the rule of law and the
independence of its Judiciary and it must respect the legal rights of
its
citizens and investors.
¨ Zimbabwe must restore freedom of the press and
liberalize
its electronic media. It must dispose of its controlling shareholding
in the
Zimbabwe Newspapers Group.
¨ Zimbabwe must observe all human and political rights
as
described in the UN Charter and in its supporting agreements to which
Zimbabwe is already a signatory.
¨ Zimbabwe must adopt, without delay, a comprehensive
package of macro economic reforms designed to unify both exchange rate
and
interest rate regimes, to restore fiscal and monetary stability and
discipline.
¨ Zimbabwe must implement a wide range of reforms
designed
to strengthen the private sector and the market mechanism.
¨ Zimbabwe must give urgent and immediate attention to
the
humanitarian
crisis.
It is now too late to rescue the 2005/06 agricultural season and we
will
have to wait another year before meaningful remedial action can be
taken
in the farm sector.
The IMF decision keeps the pressure on for reform, it gives South
Africa
time to exercise its responsibilities in the region and it does not
make our
situation any worse. I guess that is a lot to achieve under these
circumstances. What are the chances of Zimbabwe meeting the IMF on all
key
issues - zero, under this management. They, like the rest of us will
have to
wait for management changes before we can expect any changes for the
better.
Mugabe and his sorry crew only offer more of the same debilitating
inertia
and Soviet style controls and corruption.
Eddie Cross
Bulawayo, 12th September 2005.
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