Re-engagement, reform only way to go for Zim

via Re-engagement, reform only way to go for Zim – The Zimbabwe Independent October 30, 2015

Zimbabwe has intensified it’s re-engagement with the international community, with the immediate objective of resolving the arrears issue with international financial institutions (IFIs) eventually seeking debt rescheduling under the umbrella of the Paris Club.

Ritesh Anand Column

On the sidelines of the recent International Monetary Fund (IMF) annual meeting in Lima, Peru, Finance minister Patrick Chinamasa presented a strategy for clearing its external debt thereby seeking the support of creditors and development partners. Strong support from the Lima meeting, successful completion of the SMP and continued commitment by the authorities would set the stage for advancing the re-engagement process with the IFIs and bilateral creditors and herald a new beginning for Zimbabwe. There is no doubt, however, that support from the international community will come with conditions attached.

Some in government that oppose the re-engagement process have been critical of the proposed fiscal and economic reforms. Can Zimbabwe realise its goals without the support of the international community? Can we achieve growth without the necessary economic and investment reforms? Can we rely solely on diaspora inflows for investment and growth or do we need to attract foreign direct investment (FDI)?

Some of you will recall the IMF-led structural adjustment programmes of the early 1990s. Governments of all political persuasions were pressured into compliance with drastic structural adjustment measures.

Zimbabwe abandoned its measured growth with equity strategy in 1991 in favour of the notorious Economic Structural Adjustment Programme (Esap), known in Zimbabwe, aptly, as the “Economic Suffering for African Peoples”. We have experienced the consequences of this disastrous period, both economically and politically.

Is Zimbabwe ready for austerity measures that are likely to come with financial support from the international community? What impact will these austerity measures have on growth?

While the need for fiscal discipline is blatantly obvious, especially the government wage bill (which accounts for more than 80% of the budget), Zimbabwe needs to promote growth and development. What if structural adjustment (aka austerity) in Zimbabwe is replaced by a more balanced debt restructuring, encouraging investment alongside reform while protecting basic services and the vulnerable? Is it possible to achieve twin targets of growth and structural reforms?

Structural adjustment programmes (Saps) are economic policies for developing countries that have been promoted by the World Bank and IMF since the early 1980s through the provision of loans on condition of the adoption of Saps. Structural adjustment loans is funding made available by the World Bank for the purpose of supporting Saps. They are designed to encourage the structural adjustment of an economy by, for example, removing “excess” government controls and promoting market competition as part of the neo-liberal agenda followed by the bank.

The Enhanced Structural Adjustment Facility is an IMF financing mechanism to support macro-economic policies and Saps in low-income countries through loans or low interest subsidies.

Zimbabwe, as well as many countries in Africa, have suffered the long-term consequences of a combination of structural under-development, oligarchic corruption, patrimonialism and poor economic governance. Finding a way out of the bind without succumbing to more pain and suffering will be tough, requiring new ideas and new allies.

Escaping debilitating debt while promoting both growth and social justice is nevertheless possible. Today across Africa, new perspectives are on the table, and not just the tired, old, failed medicines from the IMF and others. Most notably, new ideas — and finance — are coming from China, Brazil, India, Malaysia and South Korea, among others.

A new state-led developmentalism is gaining traction across the world. In Rwanda or Ethiopia, a new African formulation of a developmental state is being forged. They all draw insights and experience from the emerging nations, most notably China. There is increased financing available from the Brics (Brazil, Russia, India, China and South Africa) with the Asian Infrastructure and Investment Bank and the Chinese or Brazilian state investment banks playing a more significant role.

Balancing these investments, offsetting risks and avoiding unsustainable debt will be a tricky balancing act for Zimbabwe in the coming years as commodity-led growth tails off. Zimbabwe relies on the mining sector to drive growth with mineral exports accounting for over 50% of total exports and 15% of GDP.

Zimbabwe needs to continue to re-engage with the international community, it desperately needs to push economic and investment reforms to attract much-needed FDI. We cannot rely on the diaspora to drive investment and growth. The country cannot achieve growth targets without the necessary reforms and support of the international community. In time, the benefits that Zimbabwe will accrue from the re-engagement process will undoubtedly silence the disparagers of this indispensable decision.

As President Robert Mugabe heads to New Delhi, India, this week for the 3rd Annual India-Africa Summit 2015, we hope that he will carry a message of hope and optimism for a more integrated Zimbabwe.

COMMENTS

WORDPRESS: 5
  • comment-avatar
    Joe Cool 7 years ago

    There is no attempt by Zimbabwe at re-engagement with the international community – there is a transparent pretense of re-engagement which indicates that the Zimbabwe government is of the view that foreigners are as unintelligent as themselves and hence easily fooled. Did they amend the labour laws to be more flexible, as promised almost 2 years ago? Didn’t the minister of mines just tell the diamond companies ‘Take what we offer or your licences will not be reviewed’? Don’t the land grabs go on, on a weekly basis. They may well find out that the people they think they are fooling are instead fooling them.

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    Tiger Shona 7 years ago

    We really badly needs all kinds of changes.
    The same with employment laws, economic policy,the rule of law.
    And who knows what these Zanu PF guys are promising the IMF.
    Problem is many of our politicians are so dishonest.
    And there was nothing wrong with ESAP. It worked well

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    Trebor Ebagum 7 years ago

    Re-engagement what? You can’t teach an old dog new tricks. No re-engagement for more hand outs. Stew in your own juices Zimbabwe. Actions have consequences.

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    moyokumusha 7 years ago

    re-engage your citizens first and give the farms back to their owners and then we will se things happen.

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    Nyoni 6 years ago

    The present regime must be forced to the negotiating table asap. The promise to conform is not happening and it will not , not while Mugabe sits on the throne. Little Hitler has evolved into a sore riddled with parasitic worms eating the flesh of a man blinded by putrid hatred of anyone who does not follow the Zanupf line. This outdated belief in a monopolistic entity shows us all how ancient the regime truly is. Out of touch with reality , not in touch with its own people.
    The world sees this and is distancing itself from this rogue regime. If they can see this then why is Zanupf not acting on this negative picture.
    This regime must realise it can not fight the powers that be in this world and just like how they are trampling upon the citizenry of our beloved country , so will they be squashed like the maggots on Little Hitler.