Fix it or go
AS we wait for central bank governor Gideon Gono to announce his 2006 monetary policy statement this month, the IMF this week issued a damning report on Zimbab
we, painting a bleak future for a country that has remained mired in an intractable crisis for over five years.
Gono, a proponent of a now apparently delusional process of recovery, has, despite all his feverish activity in trying to bring change, transparently failed and there is no hope for his next monetary policy succeeding. The nation has become tired of his blood and thunder speeches, veiled threats to industry and commerce and war cries proclaiming “failure is not an option”.
His number one enemy, inflation, has not been defeated but is rapidly gaining ground. The country is in freefall as shown by all key economic indicators: inflation which was 130% in January is now 264,8% and GDP should fall by 7%.
Gono in January told us inflation figures of 50-80% were achievable by year-end. That is not going to happen in the next 12 weeks before New Year. The IMF has said in its report that inflation could rise to over 400% by the end of the year. There is no greater illustration of failure, whatever the excuse. Failure is indeed no longer an option. It has become a stark reality and it is time for the governor to raise the white flag.
In his next policy, Gono should not pretend that things can work out in the current political environment. He should not pretend that the economy is turning the corner because of the country’s reduction of arrears to the IMF.
Evidence abounds that life is much tougher than it was in January when he presented his 2005 projection which promised us a better standard of living.
There is no need for intricate scientific formulae to prove this. In January, a loaf of bread cost $3 500. Today, workers, especially civil servants whose salaries have not moved since then, need to fork out $26 000 for the same loaf. Milk was $3 720 and now costs up to $20 000. Commuters were paying $3 000 to get to work; they now need $15 000 for a single trip.
Those in Norton need as much as $50 000 for a single trip. That is an economy on the recovery path? Only for the completely delusional.
The IMF is clear on what needs to be done. It has said Zimbabwe needs a broad package of economic policies and reforms to lower inflation and boost growth.
“Without a bold change in policy direction, the economic outlook will remain bleak, with particularly detrimental effects on the poorest segments of the population,” the IMF said.
We do not expect to see a bold policy decision that will have a bearing on this economy as long as the government pursues knee-jerk policies which only provoke international condemnation. Since the passage of the Constitutional Amendment Number 17, state agents, diplomats and politicians have reportedly led fresh invasions of farms. Gono has described the invaders as “criminals” but no one has been arrested. These criminals act with impunity and are directed at the highest levels.
With less than a month to go before the onset of the rainy season, Gono’s “command agriculture” scheme as set out in January, is way behind schedule. All projections seem to suggest that preparations for the 2005-2006 crop are a shambles. His wish to have full uptake in the A2 sector and full utilisation of machinery has remained an illusion. There was even more chaos on the land last week when the courts ruled that all offer letters issued to resettled farmers were null and void following the constitutional amendment.
In January Gono announced plans to boost exports to surpass last year’s earnings figures. We recall the promises by the central bank to come up with a balanced approach to “restore exporter viability, at the same time minimising inflationary impulses and import costs”. Successes on this front are minuscule as industry is relying on the parallel market to finance imports of inputs and machinery. It is most unlikely that the foreign currency receipts will reach the projected US$3,1 billion mark.
The governor’s wish to contain the budget deficit has remained unfulfilled as government’s appetite to spend has remained high. Elsewhere in this edition we carry the story of government’s spendfest on motor vehicles to be paid for in forex when the country does not have fuel.
At the end of his policy speech in January, Gono reminded us of the pains of 2003 and 2004. These included “fuel queues that had become a permanent feature in our cities”, electricity blackouts, delayed departures due to unavailability of Jet A1 fuel, shortages of basic commodities and the rampant parallel market.
He told us: “Surely as a committed, a dedicated and united people, we cannot afford to, nor allow ourselves to go back to this dark and sad era of our time, at a time when history will record that the nation’s morale sank to its lowest point ever recorded, a period when all hope seemed to have evaporated in thin air.”
Well, we’re back there now.
The gullible cheered his every word and endlessly repeated the refrain about turning the corner. But are we not where we were in 2004 if not worse? It is one thing not to know what to do and fail but quite another to know what to do and not be allowed to do it. Gono undoubtedly knows what has to be done but the ignoramuses around the president have stuck to their poisonous designs.
Mr Governor, no more promises. Stop misleading the public on the true state of the economy. Either fix it or go.