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On the 15th of May 2017 the IMF released a statement summarising their preliminary findings after an Article IV staff team visit to Zimbabwe.
The findings published by the IMF, for once confirm the issues we have consistently raised against ZANUPF and Minister Chinamasa’s structural lack of capacity and will to reform.
Indeed the preliminary findings confirm our position that what is at the centre of Zimbabwe’s current economic crisis is undiluted pure economic mismanagement anchored by reckless, cynical and expansionary fiscal policy.
Without being express, the statement confirms what everyone knows in Zimbabwe that Chinamasa’s voodoo economics has destroyed this country’s economy and that Chinamasa himself is easily the worst manager of this economy in the 126 years of its modern existence.
At all material times we have always argued that every sane government will live within its means.
Indeed we invented and popularised the phrase “You eat what you kill.”
Regrettably this economy is on its knees because of hooligans in ZANUPF who like broiler chickens believe that you can eat irrespective of source and the reason. They suffer from a disease called Fiscalities which is the belief that money grows on trees.
We have also argued that the centre piece of any government policy must to restore production. ZANUPF’s failure to create conditions in respect of which the economy is grown and jobs are created will always harm this economy.
We further made the point consistently that the cash crisis was caused by Chinamasa who had raided the Central Bank and stolen bank deposits kept in RTGS balances hence creating the shortage.
We argued then as we do now that it was a disaster, in any event unlawful and unconstitutional for the government to maintain an overdraft facility with the Central Bank, as a result the RBZ was forced to resort to RTGS balances in order to support the government.
We argued then as we do now that the RBZ is not a commercial bank where one can run an overdraft facility neither does the Central Bank have such funds at its disposal instead the money belongs to the depositors who in turn are suffering unable to access their funds.
Chinamasa tried to sanitise this bank robbery in both his 2016 Mid Term statement and the 2017 budget by calling it “Government position at the RBZ.”
We argued that the bond note was an unbacked currency that would create massive distortions in the economy.
The IMF hints that ZANUPF’s spending behaviour might worsen the liquidity crunch.
“Excessive government spending, if continued, could exacerbate the cash scarcity; further jeopardize the health of the external and financial sectors, and ultimately fuel inflation.”
As a matter of fact inflation has already spiked with shelf and fuel prices drastically going up in the past two weeks.
Chinamasa has always denied the point we made as he always does, shifting the blame to the banks for lending money to people who do not pay back.
He also presented a fallacy around people coming from outside and leaving with huge amounts of cash an argument we continue to argue against its validity since money is only earned through a process of production either by providing a service or by selling an asset.
The IMF also confirmed the concern the point we always made that Chinamasa’s methods of funding fiscal deficits defy the logic of economic principles. National budget deficit is now at 42% as per official government calculations.
“With a difficult external environment limiting access to foreign inflows, the ensuing large fiscal imbalances are being financed by domestic borrowing. The expansionary fiscal stance and curtailed net capital flows have resulted in cash shortages, hampering economic activities.”
This statement deals a blow to Mnangagwa’s shocking claims at the Midlands State University that a liquidity crisis would not affect economic growth claiming that the two were divorced.
This confirmation by the IMF also links with our concern that domestic borrowing only adds to the country’s sovereign debt stock which further complicates the debt crisis which Chinamasa has proved incapable of tackling.
The IMF further advices against the issuance of toxic treasury bills and bond notes in what was referred to as “issuance of debt and quasi-currency instruments,” The government has so far issued treasury bills of over US$2 billion in an attempt to monetise unbudgeted expenditure.
Another point of concern confirmed by the IMF confirms is that the government has employees on the pay roll who serve no purpose. Our position has always been that the government pay roll was dominated by ghost workers employed as part of ZANUPF rigging machinery; several audits revealed this fact but ZANUPF by its own admission is not willing to reform itself out of power.
We therefore restate our position that there is no substitute for reform; government must close the RTGS gap created by their raiding of the Central Bank the only available remedy is to pay back the money.
The IMF also confirms our recommendation on enabling the productive sector, as we stated before resources mobilised by the state must also be injected in Distressed Industries and Marginalized Areas Fund (DIMAF), Zimbabwe Economic Trade Revival Facility (ZETREF) as well as major capital projects including rehabilitating the railway network.
We also maintain that issues of corruption must be dealt with through strengthening institutions created by the constitution to combat the problem including the Police Service, Prosecutor General’s Office, the Judiciary and the Anti-Corruption Commission.
The government must also adopt a holistic debt strategy in the form of the Zimbabwe Accelerated Arrears Debt and Development Strategy (ZAADS) pursued during the Government of National Unity
The IMF diplomatically puts a recommendation on certain legal and regulatory framework to avoid policy uncertainty; we have always said that ZANUPF must repeal the Indigenisation Act.
We also content that uncertainty has been exacerbated by the conflation of government with ZANUPF; factional fights have also brought in policy contradictions.
Finally we recommend that ZANUPF adopt a cash budgeting approach, the government must live within its means and maintain a primary balance at the minimum. source-Source – Jacob Mafume, PDP Spokesperson