Finance minister faces a daunting task

via Finance minister faces a daunting task – DailyNews Live by Gift Phiri  12 SEPTEMBER 2013 9:34AM

The man President Robert Mugabe tapped on Tuesday to be his new Finance chief was not his first choice.

Indeed, as the architect of the multi-currency regime when he served as acting Finance minister in 2009, he may well have been his last.

But more than any other Zanu PF politician, Patrick Chinamasa is a party heavyweight who now stands responsible for convincing Western and skittish investors the world over that Harare is capable of reforming the Zimbabwean economy and making good on its financial obligations.

With no growth to speak of and a government debt burden equal to 150 percent of its annual economic activity — one of the highest in the world — such a task may well be too much for any one person, regardless of his political skills.

Yesterday morning, Chinamasa took oath of office and an important first step of trying to fix an economy damaged by sanctions and the profligacy of previous governments.

As expected, Mugabe’s reconstituted government helped solidify his socialist party.

In the July 31 vote, Zanu PF overcame the opposition of the MDC party to win a desperately needed crunch poll.

Now Chinamasa, 66, a constitutional lawyer with minimal economic policy-making experience, must persuade Parliament next week to pass the government’s supplementary budget and steer the most recent economic plan — centered largely on macro-economic stabilisation and the recovery of the economy.

That is the requirement imposed by Western countries and the International Monetary Fund for an IMF-staff-monitored programme (SMP) to help Zimbabwe pursue economic reforms and clear its debt arrears.

Zimbabwe asked for the staff-monitored programme in November 2011 to “accelarate economic growth, step-up the creation of sustainable jobs and help reduce poverty.”

The IMF suspended Zimbabwe’s voting rights in June 2003 as the country’s economy deteriorated and Mugabe’s government fell behind on debt repayments, but restored those rights in February 2010 in view of a significant improvement in the country’s cooperation on economic policies.

The former British colony, which is slowly emerging from years of isolation, has set up a “Debt Management Office” in Harare to interface with the Paris Club of creditors to discuss ways to deal with its $10 billion debt arrears to the IMF, the World Bank and African Development Bank (AfDB).

Trevor Maisiri, a senior analyst with the International Crisis Group think-tank, said despite what some in Zanu PF have said, the country desperately needs new capital injection, which local sources cannot provide.

“The country also needs to continue discussions with multilateral institutions in restructuring its debt, which it cant immediately pay for,” Maisiri said. “There is also a great need for humanitarian aid to address food shortages, water, health, education and other social services. This has historically been provided by the donor community.”

More crucially, Chinamasa must succeed in doing what no other politician in Zimbabwe has done before him: persuade Zimbabweans to do more belt-tightening and get public sector unions to accept the shrinking of the State.

The State bureaucracy believes he is equal to the task Reserve Bank Of Zimbabwe governor Gideon Gono said:
“Hon. minister Patrick Chinamasa, the new immediate Finance boss is not new to the portfolio and we are confident that he is more than equal to the task.”

“On our part as a central bank and financial advisors to government, our board, management and staff are excitedly ready to play our part within the confines of our mandate.”

Observers say Chinamasa is a political animal who knows the law and the political tricks of how to get the job done.

They cite Chinamasa’s experience in negotiating a deal with the powerful MDC for a new Constitution and his role as Finance minister prior to the formation of the GNU in 2009 as examples of his ability to get things done.

Unlike most Zimbabwean politicians, his friends and associates say that he leads a spartan, workaholic existence — eschewing, for example, the holiday home on a nearby Nyanga enclave that is de rigueur for much of the ruling elite.

And while he has the thrusting ambition of the politician pushing for the top, his less ideological bent allows him the opportunity to hear an opposing view.

“What is critical is the development of the appropriate policies to deal with the problems facing Zimbabwe,” said Hopewell Gumbo, a social justice activist.

“The minister has a very big task in appreciating this and that is what Chinamasa will be judged on. He has failed before and his recycling will be under scrutiny as Zimbabwe staggers to restore social and economic growth.”

Chinamasa, as both Finance minister and chief economic adviser, will be the president’s domestic point man.

People who have spoken to Chinamasa say he plans to distinguish himself from his predecessor Tendai Biti by focusing less on increasing taxes to raise revenue and more on revitalising the beaten-down agriculture and tourism sectors that are so crucial to the Zimbabwe economy.

But such efforts, crucial as they may be over the longer run, will do little to halt the rapid deterioration of the budget deficit.

For all the hopes invested in Chinamasa, most economists say it is simply too late to stave off bankruptcy by following the prescription laid down by the IMF.

In Harare, though, many people argue that if he can not do it, nobody in Zanu PF can.