Its our fault, Zimbabwe will collapse if you don’t give us cash: ED Govt sends SOS to Washington

The April 30 edition of the “Africa Confidential”publication say the Zimbabwe Government through Finance Minister Mthuli Ncube wrote an SOS message to international financial institutions saying the southern African country will collapse if help in the form of cash does not come soon. Part of the report read:

In an extended ‘mea culpa’ on behalf of President Emmerson Mnangagwa’s government, Finance Minister Mthuli Ncube has written to the international financial institutions (IFIS) in Washington saying it takes ‘responsibility for the recent policy missteps during late 2019′ which have led to inflation currently running at an annual rate of over 500% year.

Mea culpa is a Latin phrase that means “through my fault” and is an acknowledgement of having done wrong.

… In the letter [dated 2 April], a copy of which has been seen by Africa Confidential, the usually upbeat Ncube paints a relentlessly grim picture. “Zimbabwe’s economy could contract by 15-20% during 2020 – with very serious social consequences. Already 8.5 million Zimbabweans (half the population) are food insecure, he writes.

So bad is the situation, says Ncube, that it could cause an implosion of the state and threaten security in neighbouring states.

The global pandemic will take a heavy toll on the health sector, with many lives being lost and raise poverty to levels not seen in recent times, including worsening food security.

A domestic collapse also would have potentially adverse regional effects, where spillovers are significant.’

Additional report by agencies

Ncube’s letter is addressed to David Malpass, President of the World Bank, Kristalina Georgieva, managing director of the International Monetary Fund, and Akinwumi Adesina, President of the African Development Bank. He asks them to support the rescheduling or cancellation of all Zimbabwe’s foreign bilateral debt arrears and help in clearing all its multilateral arrears (AC Vol 60 No 6, Ncube wins foreign fans).

The government also needs $200 million, says Ncube, for unplanned spending to fight the pandemic, referring to World Bank estimates that the country’s financing gap is nudging $1 billion for health, education, food security and social protection.

Without those funds, Ncube says, the government will have no choice but to revert to printing money, risking a return to hyperinflation and the crash of the local currency.

In exchange for the Bank and the IMF agreeing to an emergency debt rescheduling, the government promises a ‘time-bound programme’ of economic, political and governance reforms.

This, according to finance officials in Washington, is code for saying conditions are so horrendous that Ncube has been the given the political cover to promise a crackdown on grand corruption at the heart of the government. They add that it is well-known among banks and business people as well as foreign diplomats that RBZ subsidies to gold-mining companies have directly benefited President Mnangagwa’s inner circle.

This group and senior army officers have also benefited from preferential access to foreign exchange and schemes that profit from arbitrage between the official and parallel rates of the Zimbabwe dollar, the officials add. Even if he wanted to, there is no way that Mangudya could have stood up to those factions.

One of Zimbabwe’s canniest operators, Kuda Tagwirei, who financed ZANU-PF’s election campaign in 2018, has evaded any attempt to limit his sprawling empire, and maintains close ties to both Mnangagwa and Vice-President General Constantino Chiwenga even though they are bitter rivals (AC Vol 61 No 8, Rule by rivalry).

Against this, Ncube’s promise of an ‘ambitious anti-corruption strategy’ rings hollow to finance officials. Neither do they take seriously his promises of political reform, most of whose elements have been on the government’s agenda for the past five years. Ncube’s final pledge to continue with ‘engaging in National Dialogue’ elicited the response of ‘what dialogue?’ from an official in Washington.

We hear that neither the World Bank nor the IMF have responded formally to Ncube’s letter, nor do they intend to, despite him following up with phone calls over the past week. ‘Zimbabwe is in a political, not an economic policy, crisis …without credible change on that level, nothing else will move,’ concluded the official.

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