The IMF Decision
Last Friday the IMF Board met in Washington DC to decide on the future
the membership of Zimbabwe. We have been a member and a shareholder for
years and in fact have had a number of IMF sponsored stabilization
programmes during this time. In all its history the IMF has only
from its ranks one other country and that was in the mid 50's. To get
expulsion through, the Board has to first make the recommendation for
expulsion and then has to secure 85 per cent of its membership votes to
endorse the recommendation before expulsion becomes a reality.
So it's not easy to expel a member - especially if they can rely on a
of States like Africa plus a handful of other maverick countries that
support the retention of Zimbabwe as a member - no matter how
What are the reasons for the decision of the IMF to consider it's
penalty? The most obvious is the fact that we are not servicing our
the Fund. Last week we were in fact some US$300 million in arrears and
only been making token payments for a year or so. But we owe everyone
money - PTC owes over US$100 million to its service providers, ZESA
money to those who supply us with equipment and spare parts and
GMB owes money on food imports, Noczim owes money to oil suppliers
We have an official external debt of over US$5 thousand million - none
this is being serviced and no payments have been made to other key
multilateral institutions - the World Bank is owed money, the African
Development Bank is owed money - perhaps more than the IMF in arrears.
why is the IMF debt so important? The reality is that it is not that
important. Paying our arrears to the Fund would not change our status
iota - we could not expect IMF support for any sort of stabilization
programme for some considerable time after the issue of the arrears has
dealt with and a workable recovery programme put in place.
No, the reason why the IMF threat was finally treated with such
mainly political. African leaders - struggling with their image abroad
with economic and financial problems at home, did not want to see an
State expelled for misbehavior. South Africa gave impetus to this view
they offered to settle the arrears themselves to avoid our expulsion.
To some extent the issue is also all about the fact that the Fund is
ultimate Bankers Banker. A decision to expel Zimbabwe would have
confirmed our status across the world as a pariah State. It would have
closed doors to us in virtually every corner of the world when it came
commercial lines of credit and other forms of financial assistance. It
have damaged NEPAD and struck a blow against the reputation of other
States whose position is only marginally better than that of Zimbabwe.
would be next, many countries would ask?
In fact the arrears were not the major issue on the IMF agenda in terms
its relationship with Zimbabwe. What was the real issue was quite
failure by the Zimbabwe leadership to get to grips with the problems
had resulted in the almost total isolation of the country
the near total collapse of the economy. During successive visits to the
country, the IMF team has asked local Zimbabweans "how do you carry on
these circumstances?" They looked at the statistics and were astonished
we were still functioning.
We also wonder how we survive - and obviously this is both an
and a failure, because allowing the whole pack of cards to collapse
have brought change sooner than it will do in the near future.
And so we have the specter of the Zanu PF regime contradicting itself
respect to the IMF issue. One minute they do not matter and can "go to
. The next we are scouring the country for our last remaining sources
foreign exchange to make a meaningless payment to the Fund which will
that we are not expelled but are then left with insufficient resources
import essentials like food.
Just speculate with me for a moment on what the Fund might demand in a
list to the Zimbabwe authorities in order to restore our status as a
functioning and welcome member of the Fund. My own list would
the following: -
¨ Zimbabwe must make take steps to end its diplomatic
political isolation and to restore democratic credentials to its
¨ Zimbabwe must respect the rule of law and the
independence of its Judiciary and it must respect the legal rights of
citizens and investors.
¨ Zimbabwe must restore freedom of the press and
its electronic media. It must dispose of its controlling shareholding
Zimbabwe Newspapers Group.
¨ Zimbabwe must observe all human and political rights
described in the UN Charter and in its supporting agreements to which
Zimbabwe is already a signatory.
¨ Zimbabwe must adopt, without delay, a comprehensive
package of macro economic reforms designed to unify both exchange rate
interest rate regimes, to restore fiscal and monetary stability and
¨ Zimbabwe must implement a wide range of reforms
to strengthen the private sector and the market mechanism.
¨ Zimbabwe must give urgent and immediate attention to
It is now too late to rescue the 2005/06 agricultural season and we
have to wait another year before meaningful remedial action can be
in the farm sector.
The IMF decision keeps the pressure on for reform, it gives South
time to exercise its responsibilities in the region and it does not
situation any worse. I guess that is a lot to achieve under these
circumstances. What are the chances of Zimbabwe meeting the IMF on all
issues - zero, under this management. They, like the rest of us will
wait for management changes before we can expect any changes for the
Mugabe and his sorry crew only offer more of the same debilitating
and Soviet style controls and corruption.
Bulawayo, 12th September 2005.