Time running out for Robert Mugabe

Following the sweeping victory of President Robert Mugabe and Zanu PF in the elections of July 31, Zimbabwe is at yet another crossroads where it must choose between reality and more ruin.

Zimbabwe's new administration, due to be announced this week, must break decisively with its Zanu PF past or the country, already with indicators of dire poverty and unemployment, risks slipping into another five years of increasingly dangerous social unrest.

That a country so well-endowed with natural resources, and which is better placed than most in Africa in terms of education, skills, climatic conditions and tourist attractions, should have underperformed economically, ought to convince the incoming administration that radical economic transformation can no longer be postponed.

Yet there was no recognition of this during an election campaign characterised by grandiose promises that can't be kept of a grand share-out of foreign and minority-owned assets (indigenisation), of the creation of literally millions of formal jobs and of the "empowerment" of the population, two-thirds of which is living in poverty on less than US$1,25 a day.

Indeed, since winning his surprise landslide victory with 61% of the presidential votes, Mugabe has done nothing to rein in expectations. In fact, the very opposite: he has promised to increase public-sector and military pay and pledged more money for agriculture.

At some point in the near future, perhaps in his November budget, and after some uncomfortable meetings with the IMF, the finance minister will have no choice but to tell parliament that few, if any, of Zanu PF's election promises can be honoured. He will either have to buckle down and implement an IMF-designed debt-restructuring package, including a range of politically and socially unpalatable austerity measures or leave the economy to drift.

The IMF option may yet be taken off the table, either because a sufficient number of Western countries that believe the election was rigged withdraw support or because the new government rejects the debt-relief route and seeks to go it alone - backed, it will hope, by China and other friendly nations.

The go-it-alone option looks increasingly unattractive, not least because, having borrowed heavily offshore since 2009 (US$3bn) and with accumulated arrears of US$7bn, foreign lenders are not exactly queuing up to make loans. Similarly, with the indigenisation law restricting foreign investors to 49% of the equity in their businesses, inflows of foreign direct investment have been disappointingly low (US$350m/year).

Some in government speak bravely of "leveraging" the country's mineral reserves by mortgaging them to offshore lenders at very high interest rates to repay the debt, but this is an expensive, not to say unnecessary, option when, given political flexibility on Zimbabwe's part, donors would be prepared to sign a debt-forgiveness deal.

The risk for Zimbabwe is that the elections will be seen to have solved nothing.

Unless some Western nations change their stance, Zimbabwe will be left in limbo. While a majority government will have replaced a dysfunctional coalition, the elected leader is unlikely to remain in office for more than 18 months.

It would have helped had Zanu PF won a mandate for economic reform. Instead, it won a controversial victory by putting forward policies that cannot work and that will have to be revised, if not abandoned altogether.

Time is running out, if it has not already done so.