Unravelling IMF sanctions myth

via Unravelling IMF sanctions myth November 15, 2013 by Zechariah Mushawatu Zimbabwe Independent

Zimbabwe has been unable to access loans from the International Monetary Fund (IMF), World Bank (WB) and the Africa Development Bank (AfDB) for over a decade.

Various schools of thought in Zimbabwe have given different explanations for the country’s inability to access funds. Conflicting accounts of how the sanctions came about have caused confusion in the minds of ordinary citizens prompting me to write in an attempt to demystify the issue of sanctions on Zimbabwe in as far as the IMF and the WB are concerned.

The Reserve Bank of Zimbabwe, in a document titled The Impact of Sanctions Against Zimbabwe attempts, but fails, to explain the real cause of the imposition of sanctions.

According to this document, Zimbabwe’s inability to access loans from the IMF and the WB is as a result of the controversial land reform programme which angered the West and consequently led to punitive measures against the country by institutions controlled by the West.

What is mind-boggling though in this document are the conflicting sentiments. It kicks off by conceding that Zimbabwe is unable to access loans because of its arrears to the IMF and the WB, but later makes a somersault, stating that the refusal by these institutions for Zimbabwe to access loans was in direct reaction to the country’s land reform programme. The document is thus not clear on the real cause of sanctions.

Zanu PF offers a less self-contradictory argument. The party maintains that the failure by Zimbabwe to access these loans is solely as a result of “illegal sanctions” in direct response to the land reform programme which sought to correct colonial land imbalances.

These views from Zanu PF can be found on the party’s website in an article titled Sanctions On Zimbabwe are Real.

Defining sanctions

In sharp contrast to the above arguments, other Zimbabwean sectors maintain that the country’s inability to access loans from the Bretton Woods institutions is purely as a result of failure to service its debts to these organisations since 1999. One major proponent of this view is leader of the opposition Mavambo/Kusile/Dawn, Simba Makoni.

Before going any further, it is imperative to give a short definition of sanctions and ascertain whether or not the measures the IMF and the WB are carrying out against Zimbabwe can be referred to as such.

Simply defined, sanctions are measures carried out against one party by another in order to make the party under sanctions behave in a way desired by the party implementing the sanctions. Therefore, the measures currently being carried out by the IMF and the WB against Zimbabwe fit the bill of sanctions since they seek to compel Zimbabwe to behave in a certain way.

Having established that the IMF and the WB have imposed sanctions against Zimbabwe, what remains is to interrogate the cause of these sanctions and examine whether they are being carried out solely because of the country’s arrears to the multilateral financial institutions or their implementation is a sinister move that used Zimbabwe’s arrears to the Bretton Woods institutions as a guise to punish the country for carrying out the land reform.

Determining the causes and circumstances leading to the barring of Zimbabwe from accessing the loans is an activity that requires some research which I have carried out.

Remedial actions

If one examines the measures used by the IMF and WB in dealing with countries that have arrears, one will find that these institutions have clearly laid out procedures aimed at uniform and standardised remedial actions for defaulting countries. For instance, the WB has procedures in its debt servicing handbook which outline the timeframes under which defaulting of payment will result in sanctions.

When Zimbabwe was barred from accessing IMF loans, it had defaulted on payment for over a year. Similarly, when the WB decided to take measures against Zimbabwe, it had failed to service its loans for over a year. The governing procedures of these institutions allow them to implement measures against countries that have defaulted on debt repayment for such periods as the ones mentioned, hence the sanctions.

It is thus my view that remedial measures by the Bretton Woods institutions, which include the suspension of voting rights and barring of the country from accessing loans and technical assistance, were implemented against Zimbabwe solely as a result of the country’s inability to service its debts.

The claim that IMF and the WB sanctions against Zimbabwe were carried out as a result of the land reform is a myth. There is no evidence to support this claim.

If anything, the fact that Zimbabwe was barred from accessing the loans around the same time the land reform programme was taking place is a mere coincidence that has been milked by some sectors in Zimbabwe for political expedience.

Failure to repay

This well thought-out lie unravels when one digs deeper into the sanctions issue instead of a cursory look.

Those who claim that the sanctions against Zimbabwe are as a result of the land reform agenda would have to answer whether other countries that have had such measures implemented against them because of failure to service their debts, such as Somalia and Sudan, are also being punished because of land reform or similar programmes?

Recently, Argentina was on the brink of being denied access to IMF loans for not disclosing full information to the institution; does that necessarily mean that this country was being punished for some action other than its failure to provide necessary information to the IMF?

The truth of the matter is Zimbabwe was barred from accessing IMF and WB loans because of failure to repay its debt.

If this were not the case and the IMF and WB had not followed procedure in implementing sanctions against our country, we have great legal minds that would have successfully challenged the Bretton Woods institutions through the international legal system.

Mushawatu is a UZ political science and administrative studies graduate.

COMMENTS

WORDPRESS: 8
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    Naison Mukati 8 years ago

    It is important to emphasise too that ZANU PF or its government (they are the same any way) failed to repay in 1999 precisely because it had committed national resources to a senseless war in a very distant country, DRC. The cost and benefits of that war which Mr Mugabe unilaterally entered are yet to be told, the capacity to repay loans from the Breton Woods institutions being one. The body bags of our soldiers who perished there have yet to be revealed too. It is dastardly!

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    Boss MyAss 8 years ago

    The way to work with a bully is to take the ball and go home. First time, every time. When there’s no ball, there’s no game. Bullies hate that. So they’ll either behave so they can play with you or they’ll go bully someone else.

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    Dhonhodzo 8 years ago

    Over and above the DRC war the government in 1997 went on to give war veterans 50 000 which was unavailable and caused printing of money and devaluation of our precious currency

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    Would you lend money to wellknown criminals on the never never to fund lifestyle of gross obscenity?

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    Bhola 8 years ago

    All fair and fine. Zambia defaulted on some payments to the IMF until they received $4,5 billion dollar debt relief. More recently, Greece technically defaulted on its debts to the IMF. The actions taken by the IMF are within their mandate and their policies and procedures, but the preferential execution of these policies inevitably leave people thinking that its actions on Zimbabwe were political to some extent. We need to be realistic here and understand how global politics works. The US and the UK are the largest funders of the IMF and World Banl. If the American government takes a position, it is difficult for the IMF as an institution to go against that position. When they (the IMF) tried to oppose the first bail out for Greece, they were reprimanded very quickly.

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      You have to give context to the greece situation. The Imf will not giv you money unless you have a feasible repayment plan. I,m sure you know tht greece has been restructuring its fiscal plans and system in line with conditions that were set by the EU and IMF. Zimbabwe was also given a set of conditions by the IMF, on our fiscal spending, which our “wise” leaders chose not to impliment. That is why Greece gets loans and we dont.