THE Minister of Finance, Economic Planning and Development, Dr Bernard Chidzero, yesterday assured the business community and the country as a whole that there was nothing unusual or alarming about the temporary suspension of Zimbabwe’s programme with the International Monetary Fund.
Reacting to recent reports in the London Financial Times that Zimbabwe’s standby borrowing programme with the IMF had “collapsed” and that this was a severe setback to hopes for larger borrowing, he stressed that while it had made things “a bit uncomfortable”, the suspension was only temporary, would not cripple the economy and Zimbabwe was in no danger of defaulting on its debts.
In fact, Zimbabwe had been something of a “blue-eyed boy” to the IMF until a combination of especially difficult circumstances over the past years made it impossible for the Government to contain the deficit within limits that are comfortable with IMF programme targets.
The programme was suspended after Zimbabwe’s mini-budget in February increased the budget deficit. But the move was not unusual and there was no disenchantment with Zimbabwe because of this, as the IMF understood the problems facing the country.
Now that the budget for the next year had been mapped out, negotiations and consultations had started with the IMF on the possible resumption of the programme or the negotiation of a new one.
“It is therefore incorrect to say that the Zimbabwe IMF programme has collapsed because Zimbabwe has failed to meet all IMF criteria. In fact, we have had a superb record of meeting the criteria, which are basically credit ceilings and demand management generally”, he said.
He was confident that the budget deficit problem facing the country was a temporary one.
Asked to comment on the reported “conditionality” of IMF programmes, Dr Chidzero pointed out that most institutions which lent money imposed some kinds of conditions. But if the conditions were imposed regardless of the problems facing the country, “then we would disagree.”
He believed that while the IMF had in the past adopted a rather rigid approach in this area, it was becoming more flexible.
However, this did not mean that Zimbabwe had been dictated to by the IMF. Each and every measure taken, be it the reduction of subsidies, or devaluation, had been taken because the Government had decided that they had to be taken for the benefit of the economy as a whole.
LESSONS FOR TODAY
Zimbabwe’s relationship with the Bretton Woods institutions has never that rosy. Four years into its independence, its programme with the IMF was temporarily suspended.
Citizens also remember the poverty-induced Economic Structural Adjustment Programme (ESAP), recommended by the IMF which resulted in massive job losses.
Zimbabwe cleared its US$107 debt with the IMF in 2016, but the institution refused to lend it money because it owed the World Bank, AfDB, Paris Club, etc. To most analysts, the refusal was due to the land reform programme, harshly criticised by the West.
Even after Zimbabwe was affected by the Covid-19 pandemic in 2020, the IMF announced that Zimbabwe would not qualify for the US$50 billion facilities meant to cushion low-income economies affected by the pandemic.
But 2021 looks like the year when the IMF realises that Zimbabwe like other members must benefit from the services it offers. Zimbabwe’s current IMF Special Drawing Rights is 0.15, which means that it is likely to receive about US$1 billion some time this year, for economic recovery and key social programmes for vulnerable groups. – The Herald, August 23, 1984