IMF SMP – an abortive entry point for full support of the regime
The proposed IMF Staff-Monitored Program is an entry point for full support of the regime and it ignores the factors arresting the Zimbabwean economy.
Zimbabwe has had a stolen election; it was disputed by most players including the biggest political party, the MDC. More importantly, the election was condemned by every credible local and international observer mission.
The IRI/NDI observer mission found the election to have shortcomings “giving rise to deep concerns that the process has not made the mark.”
The EU observer mission referred to the results of the election to have contained many anomalies and inaccuracies.
On the other hand, the Common Wealth Group found the public media to have been biased towards Zanu PF, the security forces to have acted on behalf of Emmerson Mnangagwa and that incumbency privileges tilted the playing field in favour of the governing party. As such, the mission concluded that “we are unable to endorse all aspects of the process as credible, inclusive and peaceful.”
Ever since the political situation has deteriorated, violence broke out on the 1st of August, the Zimbabwe National Army opened fire on unarmed civilians indiscriminately and at least 7 people lost their lives, many others were injured.
In January 2019, a reckless 147 per cent fuel increase announcement triggered a nationwide stay away called by the biggest labour movement- the Zimbabwe Congress of Trade Unions.
In response to the Stay Away, the government deployed soldiers especially in high-density suburbs who maimed and killed civilians indiscriminately; they committed other heinous crimes like rape, torture, abductions and robbery.
The fact of the matter is that the authority of Zanu PF to govern is not based on consent from the masses, their stay in power is now solely based on coercion and attrition.
A total breakdown of the social contract is, without doubt, a huge factor on the economy. Those in power are answerable to themselves, they have no concern of accountability, they pursue a narrow agenda of power retention and self-aggrandizement.
The economy is failing, despite initially predicting that the Zimbabwe economy will grow, even by IMF figures, the economy will shrink by up to 5,2 per cent.
The budget deficit continues to widen by unexplained holes.
The Presidency of Mnangagwa has been characterized by a lavish lifestyle of hiring Swiss Dreamliners and a bloated Cabinet with three similar ministries running parallel to each other under different names.
The exchange rate has collapsed, figures are cooked up, a fiscal appropriation was indexed in US dollars under a fictitious assumption that the bond note is equivalent to the US dollar.
A monetary policy statement meant to correct the myths has created a situation where the budget effectively shrinks from 8, 6 billion to 2,6 billion yet no expenditure is revised downwards.
In fact, the monetary policy fails to deal with the real exchange problems including the multiple rates of the US dollar versus the bond notes and the electronic transfer. As a result, the pricing system in the economy maintains three prices in respect of the above payment methods.
There are serious distortions on the market, most of which are deliberate; they benefit the elites who can still access US dollars at the 1:1 rate still maintained by section 43 of the RBZ Act.
More concerning is a forex retention scheme extended by the monetary policy announced in February 2019. Gold miners, tobacco farmers and many other exporters surrender up to 55% of their earnings in return for $RTGS.
The rate of retention is deliberately left undefined for the purpose of manipulation to serve a patronage agenda. All this creates problems.
Zimbabweans find creative means to avoid the legal routes of receiving international payments resulting in loss of revenue. At the core of the failure to deal with problems bedevilling the economy is also the issue of corruption.
There is corruption in the fuel industry and prices are pegged to benefit a cartel yet affecting the economy and driving inflation.
There is corruption on forex exchange, statutes are loosely and vaguely thrown around to benefit the cartel. These are issues that cannot be solved by a Staff-monitored program of the IMF.
They are issues of political will, governance and more importantly, they are issues of political legitimacy. The SMP is an entry point for full support for the regime whilst bypassing reforms. It is unsustainable.
Zimbabwe needs genuine reforms and not slogans. The IMF is not and has never been able to hold tyrannical regimes to account. Instead, under the excuse of sovereignty and through the instrumentality of these SMPs it has bought breathing space for autocrats unwilling and incapable of reform.
In Zimbabwe, the IMF have compromised and lied for the purposes of creating Staff work for themselves especially during Patrick Chinamasa’s time around the Lima Plan. Their approach is not based on multi-stakeholder consultation meant to reach an objective understanding of the political economy.
That is why as MDC we reject the SMP.
The onus is on the regime to carry out the reforms it has undertaken to do so on its own terms. Those reforms are defined in the TSP and the 2019 budget. The regime needs to earn its right to be respected.
Given its track record of false starts and policy reversals, an SMP is mendacious premature chlorination and endorsement of the failed military government.
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