Zimbabwe ‘holding Africa back’

CAPE TOWN – Zimbabwe’s economic collapse is likely to accelerate with inflation topping 5 000 per cent by year-end as President Robert Mugabe’s government loses control of a crisis already rippling across Africa, a senior IMF official said yesterday.

International Monetary Fund Africa Director Abdoulaye Bio-Tchane said Zimbabwe’s government had shown little sign of coming to grips with its mounting economic problems, promising more hardships amid sharply rising political tensions. “It depends on how much the people in the country can take,” Bio-Tchane told Reuters in an interview.”The question is how far it could fall.The last four years we’ve seen GDP falling by more than 35 per cent.Inflation is running at more than 1 700 per cent and our estimate is by the year’s end it could move even beyond 5 000 per cent.”Bio-Tchane said Mugabe and Zimbabwe Central Bank Governor Gideon Gono appeared unable to stem the economic slide, which has turned one of Africa’s most promising economies into a basket case beset by frequent shortages of food, fuel and foreign exchange.”It is one step forward, two steps back,” he said, saying Gono was fuelling the crisis by expanding the already enormous fiscal deficit to some 40 per cent of GDP this year, printing floods of new cash and subsidising struggling state-run firms.”They need to rein this in,” he said.”But obviously they need more than that.You can’t let the economy function if people are not free to operate, if their rights are not secured, including human rights.””You will always find a few people who will benefit from this system, so therefore it may continue.I can’t give a date when the whole thing will stop or collapse.But it will certainly continue falling.This will continue impoverishing people, people will continue losing their jobs, continue losing their purchasing power.”Bio-Tchane said Zimbabwe’s woes were already felt across Africa as millions of economic refugees stream out of the country, while economic growth is hampered by the loss of regional trade and investment opportunities.”It’s holding the sub-region back, and it is holding the whole Africa region back,” he said.”This was a booming economy, this was a net exporter of goods and services in the past.Now exports are falling.It is a country that is a net importer today.”He added that it appeared some countries were helping to bankroll Mugabe through loans or other deals.”We don’t have evidence of the sources, but clearly they are getting some financing,” he said.The IMF and other key Western donors, including the World Bank, suspended aid to Zimbabwe more than six years ago over Mugabe’s economic policies that are blamed for the economic meltdown.Western donors withdrew aid and other assistance, accusing Mugabe of widespread human rights violations.Despite the problems, Bio-Tchane said Zimbabwe could quickly access outside help once it made the necessary economic reforms.While the IMF in February maintained its suspension of financial and technical assistance to Zimbabwe, Bio-Tchane said efforts to repay some US$129 million in arrears to the fund had kept open its chances to obtain immediate international help.”They could be quickly eligible for technical assistance.And for funds, I must say, in the case of Zimbabwe it is really the political commitments of the government that are preventing everyone from co-operating.”Nampa-Reuters”It depends on how much the people in the country can take,” Bio-Tchane told Reuters in an interview.”The question is how far it could fall.The last four years we’ve seen GDP falling by more than 35 per cent.Inflation is running at more than 1 700 per cent and our estimate is by the year’s end it could move even beyond 5 000 per cent.”Bio-Tchane said Mugabe and Zimbabwe Central Bank Governor Gideon Gono appeared unable to stem the economic slide, which has turned one of Africa’s most promising economies into a basket case beset by frequent shortages of food, fuel and foreign exchange.”It is one step forward, two steps back,” he said, saying Gono was fuelling the crisis by expanding the already enormous fiscal deficit to some 40 per cent of GDP this year, printing floods of new cash and subsidising struggling state-run firms.”They need to rein this in,” he said.”But obviously they need more than that.You can’t let the economy function if people are not free to operate, if their rights are not secured, including human rights.””You will always find a few people who will benefit from this system, so therefore it may continue.I can’t give a date when the whole thing will stop or collapse.But it will certainly continue falling.This will continue impoverishing people, people will continue losing their jobs, continue losing their purchasing power.”Bio-Tchane said Zimbabwe’s woes were already felt across Africa as millions of economic refugees stream out of the country, while economic growth is hampered by the loss of regional trade and investment opportunities.”It’s holding the sub-region back, and it is holding the whole Africa region back,” he said.”This was a booming economy, this was a net exporter of goods and services in the past.Now exports are falling.It is a country that is a net importer today.”He added that it appeared some countries were helping to bankroll Mugabe through loans or other deals.”We don’t have evidence of the sources, but clearly they are getting some financing,” he said.The IMF and other key Western donors, including the World Bank, suspended aid to Zimbabwe more than six years ago over Mugabe’s economic policies that are blamed for the economic meltdown.Western donors withdrew aid and other assistance, accusing Mugabe of widespread human rights violations.Despite the problems, Bio-Tchane said Zimbabwe could quickly access outside help once it made the necessary economic reforms.While the IMF in February maintained its suspension of financial and technical assistance to Zimbabwe, Bio-Tchane said efforts to repay some US$129 million in arrears to the fund had kept open its chances to obtain immediate international help.”They could be quickly eligible for technical assistance.And for funds, I must say, in the case of Zimbabwe it is really the political commitments of the government that are preventing everyone from co-operating.”Nampa-Reuters