After years of cursing IMF Mugabe eats humble pie and promise to repay debt - he is not out of the woods yet!

When Mugabe broke Zimbabwe’s relationship with the IMF and WB in 1999, it was a very bitter and acrimonious breakup. Zimbabwe was coming to the tail end of the second and last Economic Structural Adjustment Programme (ESAP) sponsored and financed by the two financial institutions. Mugabe accused the two of engineering the country’s economic woes as the economic recovery promised at the start of each programme never materialized, Zimbabwe was certainly worse off economically than she was in 1990 when the first ESAP was introduced.

The economic recovery programmes never had any chance of success because the Zanu PF regimes continued with its reckless spending, especial by the ruling elite. Mugabe blamed the failure on the IMF and WB for having fostered on the nation unworkable programmes. He vowed he would not repay the loans given to him to finance the programmes. The two institutions had no choice but to stop granting Zimbabwe any more financial assistance, what bank on this side of the grave would give you more money when you will not repay what it gave you already.

When the Western countries impose sanctions of his regime following the blatant vote rigging of the 2002 Zimbabwe elections; Mugabe stepped up his anti-western rhetoric accusing the IMF and WB of taking instructions from Washington and London to squeeze Zimbabwe financially.

Last Wednesday Finance Minister, Patrick Chinamasa, promised to pay IMF $1.8 billion in cumulated debt serving changes by May this year; a complete U-turn by Mugabe after all the years of finger pointing and bad mouthing the IMF.

Minister Chinamasa has also assured the IMF officials who were on a fact finding mission to Zimbabwe that Zimbabwe will reduce its government expenditure on civil servant wages from the present unsustainable level of 82% to a more manageable 52% by 2019. Mugabe has always been Mr Big Spender, dating back to the country’s independence; and now with the economy on its knees he still fighting to kick the habit.

Whether or not Zimbabwe will repay the debt and reduce its bloated public service labour force is another matter what is important here is that Mugabe has been forced to eat humble pie and admit Zimbabwe’s economic meltdown is real and that he needs the IMF and other international institutions to revive the country’s economy.

By Minister Chinamasa’s own admission Zimbabwe needs 8 to 15% economic growth rate to revamp the national economy. He had projected a growth rate of 2.7% this year and the IMF officials visiting the country have just revised this down to a mere 1.4%. For a country with unemployment rate a nauseating 90% plus and has been has been 80% plus for the last 15 years, at least, this is a complete disaster.

“Economic difficulties have deepened. Zimbabwe cannot wait and needs to act now,” warned Domenico Fanizza, the IMF official.   

Even if Zimbabwe repays all its outstand debts to IMF, WB, ADB and all the other international bodies we will not be out of the woods yet. Zimbabwe is still considered a high risk country to do business in by both local and international donors and investors alike because of the Zanu PF reputation as a corrupt and lawless regime. Zimbabwe’s 2008 indigenisation law, forcing foreign investors to sell as much as 51% of their shares to locals is one example of the lawlessness but not the worst case. By blatantly rigging the elections Zanu PF has send a clear message of its contempt of the rule of law.

To get out of the present economic difficulties Zimbabwe will need a lot more than carry out economic reforms; above all else, we need political reforms. We need to implement the GPA reforms followed by the holding of free, fair and credible elections to convince the world that Zimbabwe is finally ready to honour its economic as well legal obligations.