Business / Economy
Joint statement by MDC-T and PDP on the IMF Visit
16 Jun 2016 at 01:37hrs | Views
Only substantive political and economic reforms can save Zimbabwe
Professor Erik Reinert, a well-known developmental economist, in his book titled-How the rich countries got rich and why poor countries stay poor - argues that the economic models which the Western countries implemented to get rich are far away from the solutions they continue to proffer to African countries through organisations such as the IMF, the World Bank and many other "consultants" who come to Africa purportedly with "solutions" to fix our poverty.
Zimbabweans are certainly not happy with the status quo and want substantive political and economic reforms now. Yet it seems to us that the West including the IMF are pursuing an agenda to re-engage and assist what to us is essentially a rogue regime whose time to go has come.
This of course has happened many a time in Africa, where the West comes with its own political and economic paradigms and imposes them on Africans without really understanding or taking into account what the people want or what is sustainable. This is the "welfare colonialism" which Reinert also talks about in his book.
There is no doubt that the only viable solution for Zimbabwe is for Mugabe to go and the replacement of his looting machinery with a new team that will take our country forward. There is no other alternative to that and yet it seems to us that "stability" as opposed substantive political change is more important to the IMF and its Western backers. We do not agree with that paradigm.
Unfortunately, the pursuit of appeasement and not confrontation of the dictator continues to fuel some false hope in the minds of this regime that everything is going to be okay, even when it is evident that it is time for fundamental political and leadership change in Zimbabwe if we are to see any economic revival.
Zimbabwe is bankrupt and is unable to meet its day to day needs and is therefore a failed state, thanks to Mugabe and his coterie of praise singers. This has resulted in the government contemplating the issuance of a pseudo and proxy currency termed "bond notes" as a means to escape the urgency of implementing substantive economic reforms, as promised by Patrick Chinamasa, the Minister of Finance, in his LIMA strategy document of September 2015.
In it, he promised to implement a supportive economic reform agenda which includes; the strengthening of confidence in the financial services sector, accelerating re-engagement with the international community, revitalising agriculture, advancing beneficiation in or value addition agriculture and mining, focusing on infrastructure development, unlocking small to medium enterprise potential, improving the investment climate, accelerating public enterprise reform, modernising labour laws and aligning of laws with constitution and dealing seriously with corruption.
Almost nine months later, no reforms are in place and we have actually seen an increase in corruption, confusion and bungling within the financial services sector which has now run out of cash, continued occupation of agricultural properties, corrupt infrastructure development deals with inflated costs to fund the ZANU (PF) looting machinery, the continued collapsing of small companies due to non-viability, declining productivity and export earnings and lack of new capital investment inflows.
On the political front we have seen activists getting arrested without cause and the deliberate subversion of the will of the people by interfering in the management of city councils. Added to that, the whereabouts of activist Itai Dzamara are still a mystery.We have also seen a deliberate dithering to align our laws with the new constitution. That is unacceptable.
Zimbabwe is in crises, a crisis of confidence, a crisis of governance and a crisis of leadership. It therefore cannot be business as usual. To us, our status quo does not reflect any stability at all, but paralysis and regression. ZANU (PF) is clearly lacking any urgency or sincerity in implementing substantive reforms which are critical to both the political and economic survival of the country.
As we have stated before, ZANU (PF), and Mugabe in particular, are not sincere reformers, but are seeking to buy time through empty promises and postpone the inevitable. We suspect that ZANU (PF) is now more interested in positioning itself for the 2018 elections, than the implementation of urgent reforms to turn around the economy as promised to the IMF and to also align our laws with the new constitution.
Any economic reforms contemplated must address key structural problems of low productivity, negative growth, public financial mismanagement and corruption including addressing the national debt. Without these, we wager that the macroeconomic environment will continue to deteriorate further.
It is fact that our economic growth has declined significantly post the inclusive government period having peaked at an average 8% between 2009 and 2012 compared to a mere 1.5% average (if not less) for the post GNU period to date.
During the inclusive government period, the budgeted budget surplus was $100 million compared to the current accumulated budget deficit since 2013 of $2.5 billion mainly being funded through the issue of treasury bills. In addition, the state has taken over the RBZ debt and financial sector non-performing loans totalling $2.1 billion while state enterprises continue to borrow millions for projects which have become a conduit to fund the ZANU (PF) looting machine. This is clearly unsustainable and cannot be addressed by merely introducing a pseudo currency to increase money supply.
In fact, the $200 million Afrexim Bank facility, which is a stand by facility the RBZ hopes to back up the printing of bond notes, is not only a bad idea but is also illegal as the Reserve Bank Act no longer allows quasi-fiscal operations. It would be unfortunate if the IMF were to bless this illegality.
It is a paradox that, given the above state of affairs, the IMF actually gave the government a positive rating on the Staff Monitored Program despite contradictory evidence on the ground. We urge the IMF to seriously engage civil society, local economists, political parties and the business sector in order to get a clearer picture of Zimbabwe's financial status before prescribing what we view as inappropriate solutions.
Among other things, Zimbabweans are therefore calling for:
- A new political leadership which is sincere and serious in addressing the socio-economic problems we are facing.
- The repeal of the Indigenisation Act which is preventing the inflow of new long term investment capital to create jobs and incomes.
- Substantive political and economic reforms now before it is too late.
- Macro-economic stability through fiscal discipline, accountability and transparency.
- Adoption of the Rand as the anchor currency and the scrapping of the bond notes idea.
- Dealing decisively with corruption especially in State Enterprises and the immediate dismissal of those Ministers who have been found to be corrupt.
In our view, the time for good sounding policy documents or intentions and feel good meetings is over. Our country is at the brink and we expect those who wish to assist us out of this quagmire such as the IMF, to be at least well informed about the realities being faced by ordinary Zimbabweans on the ground before prescribing solutions.
The time for change is now.
Jointly Issued by;
Vince Musewe-PDP Secretary for Finance and Economic Affairs
Dr Tapiwa Mashakada- MDCT Shadow Minister of Finance
Professor Erik Reinert, a well-known developmental economist, in his book titled-How the rich countries got rich and why poor countries stay poor - argues that the economic models which the Western countries implemented to get rich are far away from the solutions they continue to proffer to African countries through organisations such as the IMF, the World Bank and many other "consultants" who come to Africa purportedly with "solutions" to fix our poverty.
Zimbabweans are certainly not happy with the status quo and want substantive political and economic reforms now. Yet it seems to us that the West including the IMF are pursuing an agenda to re-engage and assist what to us is essentially a rogue regime whose time to go has come.
This of course has happened many a time in Africa, where the West comes with its own political and economic paradigms and imposes them on Africans without really understanding or taking into account what the people want or what is sustainable. This is the "welfare colonialism" which Reinert also talks about in his book.
There is no doubt that the only viable solution for Zimbabwe is for Mugabe to go and the replacement of his looting machinery with a new team that will take our country forward. There is no other alternative to that and yet it seems to us that "stability" as opposed substantive political change is more important to the IMF and its Western backers. We do not agree with that paradigm.
Unfortunately, the pursuit of appeasement and not confrontation of the dictator continues to fuel some false hope in the minds of this regime that everything is going to be okay, even when it is evident that it is time for fundamental political and leadership change in Zimbabwe if we are to see any economic revival.
Zimbabwe is bankrupt and is unable to meet its day to day needs and is therefore a failed state, thanks to Mugabe and his coterie of praise singers. This has resulted in the government contemplating the issuance of a pseudo and proxy currency termed "bond notes" as a means to escape the urgency of implementing substantive economic reforms, as promised by Patrick Chinamasa, the Minister of Finance, in his LIMA strategy document of September 2015.
In it, he promised to implement a supportive economic reform agenda which includes; the strengthening of confidence in the financial services sector, accelerating re-engagement with the international community, revitalising agriculture, advancing beneficiation in or value addition agriculture and mining, focusing on infrastructure development, unlocking small to medium enterprise potential, improving the investment climate, accelerating public enterprise reform, modernising labour laws and aligning of laws with constitution and dealing seriously with corruption.
Almost nine months later, no reforms are in place and we have actually seen an increase in corruption, confusion and bungling within the financial services sector which has now run out of cash, continued occupation of agricultural properties, corrupt infrastructure development deals with inflated costs to fund the ZANU (PF) looting machinery, the continued collapsing of small companies due to non-viability, declining productivity and export earnings and lack of new capital investment inflows.
On the political front we have seen activists getting arrested without cause and the deliberate subversion of the will of the people by interfering in the management of city councils. Added to that, the whereabouts of activist Itai Dzamara are still a mystery.We have also seen a deliberate dithering to align our laws with the new constitution. That is unacceptable.
Zimbabwe is in crises, a crisis of confidence, a crisis of governance and a crisis of leadership. It therefore cannot be business as usual. To us, our status quo does not reflect any stability at all, but paralysis and regression. ZANU (PF) is clearly lacking any urgency or sincerity in implementing substantive reforms which are critical to both the political and economic survival of the country.
As we have stated before, ZANU (PF), and Mugabe in particular, are not sincere reformers, but are seeking to buy time through empty promises and postpone the inevitable. We suspect that ZANU (PF) is now more interested in positioning itself for the 2018 elections, than the implementation of urgent reforms to turn around the economy as promised to the IMF and to also align our laws with the new constitution.
Any economic reforms contemplated must address key structural problems of low productivity, negative growth, public financial mismanagement and corruption including addressing the national debt. Without these, we wager that the macroeconomic environment will continue to deteriorate further.
It is fact that our economic growth has declined significantly post the inclusive government period having peaked at an average 8% between 2009 and 2012 compared to a mere 1.5% average (if not less) for the post GNU period to date.
During the inclusive government period, the budgeted budget surplus was $100 million compared to the current accumulated budget deficit since 2013 of $2.5 billion mainly being funded through the issue of treasury bills. In addition, the state has taken over the RBZ debt and financial sector non-performing loans totalling $2.1 billion while state enterprises continue to borrow millions for projects which have become a conduit to fund the ZANU (PF) looting machine. This is clearly unsustainable and cannot be addressed by merely introducing a pseudo currency to increase money supply.
In fact, the $200 million Afrexim Bank facility, which is a stand by facility the RBZ hopes to back up the printing of bond notes, is not only a bad idea but is also illegal as the Reserve Bank Act no longer allows quasi-fiscal operations. It would be unfortunate if the IMF were to bless this illegality.
It is a paradox that, given the above state of affairs, the IMF actually gave the government a positive rating on the Staff Monitored Program despite contradictory evidence on the ground. We urge the IMF to seriously engage civil society, local economists, political parties and the business sector in order to get a clearer picture of Zimbabwe's financial status before prescribing what we view as inappropriate solutions.
Among other things, Zimbabweans are therefore calling for:
- A new political leadership which is sincere and serious in addressing the socio-economic problems we are facing.
- The repeal of the Indigenisation Act which is preventing the inflow of new long term investment capital to create jobs and incomes.
- Substantive political and economic reforms now before it is too late.
- Macro-economic stability through fiscal discipline, accountability and transparency.
- Adoption of the Rand as the anchor currency and the scrapping of the bond notes idea.
- Dealing decisively with corruption especially in State Enterprises and the immediate dismissal of those Ministers who have been found to be corrupt.
In our view, the time for good sounding policy documents or intentions and feel good meetings is over. Our country is at the brink and we expect those who wish to assist us out of this quagmire such as the IMF, to be at least well informed about the realities being faced by ordinary Zimbabweans on the ground before prescribing solutions.
The time for change is now.
Jointly Issued by;
Vince Musewe-PDP Secretary for Finance and Economic Affairs
Dr Tapiwa Mashakada- MDCT Shadow Minister of Finance
Source - MDC-T and PDP
