Tomorrow’s presentation of the 2014 national budget by Finance Minister Patrick Chinamasa will be a crucial indicator of the way forward for Zimbabwe because it is now easier for the Zimbabwe African National Union-Patriotic Front to sell out since it has the mandate of the people.
ZANU-PF won the 31 July elections on the back of two major promises- to consolidate land reform and indigenise the economy. But it has been under so much pressure since then to soften its stance, especially on indigenisation.
The ZANU-PF victory is almost reminiscent of that of Salvador Allende of Chile in 1970. His platform, like that of Robert Mugabe, was to take over control of the economy from foreign companies.
When United States President Richard Nixon heard about Allende’s victory he ordered Central Intelligence Agency director Richard Helms to: “make the economy scream”.
There has been no formal announcement from Washington about Zimbabwe but judging from the bad blood between Barack Obama and Mugabe, the US president could easily have issued a similar instruction.
After all, Washington has refused to accept the results of the July elections and has refused to lift sanctions on Zimbabwe, including those on its diamonds, despite an appeal from the Kimberley Process which said the US should follow the European Union which lifted its sanctions.
Whatever the case, Zimbabwe’s economy is certainly screaming. The liquidity crunch and the current cash shortage have hit the average Zimbabwean at the most inconvenient time- Christmas.
Chinamasa was forced to postpone the presentation of his 2014 budget from November to this month, but nothing seems to have changed. Instead, things seem to have gotten worse.
With its huge debt and no cash at the banks, Zimbabwe could seek the easy way out by adopting recommendations of the International Monetary Fund which has had a team in the country for the past nine months.
The ground has already been softened with persistent reports that the government had softened its stance on indigenisation, first through the appointment of soft spoken Francis Nhema and concessions that Mines Minister Walter Chidakwa supposedly made.
But Mugabe has rubbished all these claims saying is no going back on indigenisation and there will be no exceptions.
While those opposed to the current ZANU-PF policies see the IMF as the solution, studies have shown that the IMF medicine, wherever it has been administered, has been worse than the disease.
The IMF takes its cue from Washington and Washington is still pro-free market which is not doing well at the moment.
Several countries in the same situation as Zimbabwe have been forced to swallow the bitter pill before but the consequences were dire for the ordinary people.
Bolivia did so nearly three decades ago, forced by its huge debt whose interest alone was more than the entire budget to run the country.
Argentina was forced to swallow the bitter pill after the Falkland Islands war also because of its huge debt.
Even Poland, after the trade union party- Solidarity- won the elections on the platform of representing workers’ interests, abandoned this to swallow the IMF pill.
Mugabe has been adamant that the Zimbabwe Agenda for Sustainable Socio-Economic Transformation- the government’s economic blue-print is the only way forward. But even Zim Asset says that the government will accelerate the progress which the country has registered in the re-engagement process with the International Financial Institutions and creditors.
IFIs are usually the IMF, the World Bank and the African Development Bank.
Under Zim Asset, the government plans to:
- Conduct regular debt sustainability analysis
- Develop a sustainable medium term debt strategy
- Prioritise grants and concessional financing from development partners
- Restrict non-concessional borrowing to financing of key infrastructure projects such electricity generation, water supply and sanitation and rehabilitation of roads
- Mobilise resources through issuance of bonds (industry, agro etc).
On paper, it looks quite simple and straight forward, but the devil will be in the detail. Nothing will be sweeter than getting Zimbabwe to kowtow to the IMF following Mugabe’s rhetoric about indigenisation and economic empowerment.
Only Chinamasa will tell tomorrow.
(12 VIEWS)
