Chinamasa panics over Zimbabwe’s economic meltdown

via Chinamasa panics over economic meltdown – The Zimbabwe Independent May 2, 2014 by Elias Mambo

AFTER failing to secure an economic rescue package from China, South Korea and Kuwait as well as a reprieve from multilateral lending institutions, Finance minister Patrick Chinamasa is running scared as he has briefed the Joint Operation Command (Joc) — which brings together the army, intelligence services and the police — suggesting the issue is now treated as a national security matter.

Informed government sources say Chinamasa, under pressure to deliver a workable matrix to rescue an imploding economy, presented a report to Joc clearly showing since President Robert Mugabe and Zanu PF won the elections last year, the economy has been on a downward spiral but no one, including the so-called “all weather friends” such as China, are willing to bail out the country.

Sources close to the issue say Joc met on April 17 after five months of no get-togethers citing different reasons, including the absence of some members like Presidential Affairs and Intelligence minister Didymus Mutasa who has been sick, to assess the economic situation and its security implications.

The sources say the security service chiefs are anxious about the state of the economy insofar as it impinges on security matters and are pressuring the already harried Chinamasa with demands to find ways of reviving the economy before the situation spins out of control.

“Chinamasa reported that international financiers and countries approached were reluctant to offer a rescue package and lines of credit to Zimbabwe due to its bad debt record, poor credit rating and political risk.

“He also said mobilising resources had become a challenge because institutions such as the International Monetary Fund (IMF), World Bank and African Development Bank (ADB) are owed billions of dollars by Zimbabwe,” a source said.

After the elections Chinamasa met the ABD, IMF and World Bank, among other multilateral lenders, seeking financial bailouts.

The World Bank’s October 2013 report on Zimbabwe said the country was facing downside risks in agriculture; political uncertainty during the run-up to elections resulting in low business confidence; liquidity challenges and very high real interest rates on short-term credit; ballooning wage bill in the public sector; ailing infrastructure; possible compression of exports on the back of the fragile and slowdown of the global economy; potential destabilising effects of the indigenisation programme on the economy and disorderly unwinding of vulnerabilities in the banking sector.

Chinamas also approached China, South Korea and Kuwait without success.

Early this year, Chinamasa returned home empty-handed from his trip to Beijing where he was told there would be no bailout but bankable projects funding. Chinamasa, accompanied by Deputy Foreign Affairs minister Christopher Mutsvangwa, failed to convince the Chinese business community in Beijing and Shanghai to loan Zimbabwe funds using the country’s minerals as security.

Through securitisation of minerals, Chinamasa was hoping to get US$10 billion in funding to finance the ambitious ZimAsset, a policy document pitched as the panacea for economic revival by the Zanu PF government, which needs US$27 billion.

Sources say Chinamasa’s approach to Joc was an indication that he had run out of options.

“The minister’s meeting with Joc on April 17 clearly shows he has run out of options and now wants the economy to be handled as a security matter so that decrees and other unorthodox interventions can be made,” a source said.

“While Joc is obviously keen to understand the state of the economy to assess its impact on security matters, they have no solution to the economic problems at hand. It was easy for them to manipulate elections but they can’t rig the economy.”

A senior government official said it was alarming Chinamasa was now approaching Joc.

“What do they know about the economy? People who have not even read Adam Smith, not just the Wealth of Nations but mostly significantly The Theory of Moral Sentiments, which is more important,” the official said. “He is working hard but that’s the wrong way of doing it. His proposals have been rejected by colleagues and now he wants interventions by decrees. He needs a team of competent economists and advisors to come up with serious economic matrices to rescue the situation.”

To try to cultivate good relations with the IMF, he has continued with Staff Monitoring Programme (SMP) which although it does not include financial assistance or endorsement by the IMF executive board helps to improve relations.

An IMF staff mission, led by Mr. Alfredo Cuevas, met with Chinamasa and other senior Zimbabwean authorities in Harare during March 12-26 2014 to discuss the SMP and state of the economy.

The IMF team held discussions Chief Cabinet Secretary Misheck Sibanda, Mining minister Walter Chidhakwa, Indigenisation minister Francis Nhema, Advisor to President Robert Mugabe Timothy Stamps, then acting Governor of the Reserve Bank of Zimbabwe Charity Dhliwayo, Chinamasa and other senior government officials, as well representatives of labour, business, civil society, and development partners.

Chinamasa was in Washington DC early this month for IMF spring meetings.

The IMF mission’s discussions covered recent economic developments and the near and medium-term outlook and risks for Zimbabwe; implementation of the policies and reforms under the SMP; and measures to restore fiscal and external sustainability, enhance financial sector stability, and unlock the country’s potential for sustained growth and poverty reduction.

In recent years Zimbabwe’s economy expanded following more than a decade of decline that culminated in hyperinflation, but the rebound phase of its recovery is over. Growth decelerated in 2013 and real GDP was just above 3% percent, a sharp decline from 10,5% in 2012.

Just as Chinamasa warned Joc, the IMF equally painted a gloomy picture of the situation during its visit to Zimbabwe in March. The World Bank’s latest report does point out similar issues .

 

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21 comments on “Chinamasa panics over Zimbabwe’s economic meltdown
  1. Will the Doctor says:

    Ha ha ha. Good. I’m enjoying this.

    • Don Cox says:

      Yes, but it is the ordinary Zimbabweans who will suffer when the soldiers and police start raiding for food.

  2. MikeH says:

    THE CHOICE IS SIMPLE, IT’S GOODBYE MUGABE&CO OR IT’S GOODBYE ZIMBABWE. WHICH IS IT TO BE ?

  3. DL says:

    Things may finally start to get interesting once Mugabe starts to panic. He’s just now realized that the roads are in disrepair. Perhaps he will soon start to put it all together in his head and realize that “his” whole country’s economy is in disrepair too!

  4. Jono Austin says:

    Excellent article and I would imagine right on the money! They have painted themselves into a corner with nowhere to turn. The clowns didn’t realise that the GNU was their salvation. They still controlled the levers of power but you had MDC lending some credibility to the country and some stabilisation. There are going to be all sorts of conciliatory noises emanating from zanu and Mugabe, but the problem is that no one trusts them. They have proven themselves time and again to be liars, killers, and thieves and as corrupt as the day is long. They have massively dented agricultural production and industrial production. There is NO MONEY! I can definitely see the introduction of the zimdollar if external funds don’t come in. That may buy them a little time and they will desperately then try and blame the resultant inflation on the shopowners and assorted business leaders. I don’t know whether the people will buy it this time because there has been no inflation under the external currency regime. Zanu, YOU HAVE A PROBLEM.

  5. Petal says:

    ooh ooh THEY ARE IN PANIC STATION WITH ONLY THEMSELVES TO BLAME!!

  6. Petal says:

    ANOTHER ONE TRYING TO SAVE HIS OWN SKIN oohOOOh!

  7. Zvakwana says:

    Who, in their right minds, would want to lend money to a 34 year old mafia style government?

  8. Sarurawako says:

    This time dont even think about another GNU. Let those thieves choke out of existence. Tswangi and Biti dont do it. It you do you have sold out fair and square. Listen to what ZUNDE is saying. After all this grand coalition idea was their idea which you are now plagiarising.

  9. Chitova weGona says:

    Those so called army chiefs,Joc,service chiefs or whatever flowery language they use to describe them can be appointed to cabinet posts but the economy will keep sinking. They are ruthless and useless bunch of thugs. So Chinamasa can call them a million times but they wont solve anything. They helped zanu to rig the election but the economy is a different game. Keep talking while the country drowns.

  10. Jan says:

    Hey mugabe it is easy to rig the election. Sorry steal the election but as you are finding out you cannot rig the economy. however, you did stl from the economy that is why there is no economy to speak of. Whoever told you that a country can never go bankrupt lied to you BIG TIME.And like a fool you believed that lie. you are more stupid than I thought.

  11. Little dorrit says:

    Patrick – ask Cuthbert, Gershwin, Brigadier/Colonel (whatever) Christmas Tree and others to lend you some change from their sock drawers.

  12. Chaka says:

    This senior gvt official is correct. Chinamasa is not aware China has released a substantial sum to support the military. Pls discipline PC.

  13. Owen says:

    Remember the military intervention in agriculture — Operation Nzarayapera. Still hungry? Now they plan to use firepower to make the economy grow… Operation MaUSdollarakura? Still poor?

  14. Hlafunana Magade says:

    This is not the 70s where one could shout “simba rokutonga rinobva pamuromo wegidi” lifting his gun before un armed terrified rural people. Its the economy in a globalised environment. When a president allows his loyalists to loot left right and centre seizing whatever each one of them can it is ridiculous to talk of an economy. Its just thuggery hence it is bound to crumble.

  15. Godobori says:

    China supports non productive activities like the military, bombs, weapons etc and not industry. They want the Mugabe looters to believe that they are safe when they hold big guns. And that way, they dominate our economy, taking our money and natural resources to China to support Chinese industry while our close down…

    Do ZPF have brains!? Varume, its time we start to look for a new team of industrialists and academics to take over the reins. This Chimurenga looting bunch has no future for us.

  16. roving ambassador. says:

    I think its just a waiting game. The responsible leadership will definitely pop out of the wood work with the demise of Zanu.
    Let the regime fall.
    Looters and pillagers.
    Get rid of them all.
    They can go where they hid the loot.

    mbwa

  17. Chuzurator says:

    Y not promote pan africanism because these so called ”eastern friends” are not at all friends.they are doing exactly what the european powers did

  18. gorongoza says:

    Try Iran or Myanmar (Burma). They might be willing to throw a few dollars at you! You guys even robbed Gadaffi of his moneys and never paid him back. who do you really can trust you? you never pay anyone back. you think the world owes you! Munoba too much nezviJOC zvenyu zvimbavha izvo! manje muchasura chando!

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