President Robert Mugabe’s taskman, Patrick Chinamasa, who has been shifted from the Ministry of Justice to Finance, has been saddled with a heavy burden- how to deal with the International Monetary Fund’s Staff Monitored Programme.
The programme which covers the nine month period from April to December this year was aimed at:
- Strengthening fiscal sustainability by ensuring that expenditure is kept in line with fiscal revenue, protecting investment in infrastructure and priority social spending, and gradually clearing outstanding domestic arrears;
- Begin rebuilding international reserves;
- Increasing financial sector stability by implementing financial sector reforms and tightening the regulatory framework; and
- Advancing the structural reform agenda, including areas of public financial management, tax policy and administration, and increasing transparency in diamond revenues.
Though the programme was agreed by cabinet, it was largely driven by the Movement for Democratic Change represented by then Finance Minister Tendai Biti, to get Zimbabwe back into the international arena.
The programme has already been offset by the elections and the national referendum because the government had no money for both and had to source it from elsewhere.
It would also not be unreasonable to assume that the programme is now off-track as nothing was probably done to meet targets during the election campaign period from May to end of July.
The biggest problem, however, was the victory of the Zimbabwe African National Union-Patriotic Front and its leader Robert Mugabe in the 31 July elections. This has obviously upset the programme because the West has refused to accept the election results.
This poses the question: How can Zimbabwe work with the International Monetary Fund when the United States and the European Union do not recognise its government? More importantly how will the IMF work with Zimbabwe when it is not allowed to give loans to Zimbabwe unless this is approved by the United States president?
ZANU-PF won the 31 July elections basically on two platforms: consolidating land reform and indigenising the economy. Chinamasa will, therefore, have to answer the crucial questions about whether the staff-monitored programme (SMP) is compatible with the ZANU-PF promise to deliver the economy to the people.
The first hurdle is likely to be debt. The SMP is aimed at getting Zimbabwe to pay back its debt, especially its arrears so that it can get back onto the IMF’s good books and be able to borrow again.
ZANU-PF in its manifesto said debt was a major threat to winning all the goals of the people over the next five years. The debt, estimated at US$10 billion, includes US$700 million incurred by Ian Smith’s Rhodesian regime ironically from some Western countries – that have imposed sanctions against Zimbabwe – “to enable Smith and his racist cabal to fund their brutality and atrocities during the liberation struggle and to avoid the UN backed sanctions against Rhodesia”.
The party says there are two policy actions that are needed to address this threat. “In the first place, it is not right that Zimbabweans should continue to be burdened by a debt whose unjust origins are in Rhodesia and whose loans came from Western countries that have imposed illegal sanctions against Zimbabwe today thereby making the burden of the original unjust debt even worse. The time has come to revisit this issue once again with a view to cancelling a significant portion of the debt to redress the unjust origins of the debt.
“In the second place, any settlement of the remaining debt should be based on mobilising domestic resources from the Indigenisation and Economic Empowerment programme.”
The SMP says Zimbabwe must use proceeds from its natural resources like diamonds to pay off the debt.
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