From: "Patrick Bond" <pbond at wn.apc.org> Date: Fri, 17 Dec 1999 06:40:12 +0200
This is where I'll be for the first two weeks of January. My guess is that after about a year of Z$40/$1US (in November 1997 the Z$ was 9 to US$1, and inflation has averaged around 35% since then), the currency will be fairly radically devalued, then exports will rise and the implosion will be avoided. But yes, structural flaws associated with the 1990s IMF/WB macroeconomic policy have wrecked this once extremely industrialised (31% of GDP at peak) economy... A workers' party (the Movement for Democratic Change) is putting together a programme and should win a majority (or near it) of seats in parliament in an election (to be held sometime between April and August), and then boot out the corrupt, venal Mugabe in the 2002 presidential election...
On 16 Dec 99, at 14:31, Doug Henwood wrote:
Date sent: Thu, 16 Dec 1999 14:31:23 -0500 To: lbo-talk at lists.panix.com From: Doug Henwood <dhenwood at panix.com> Subject: Zim economy "near implosion" Send reply to: lbo-talk at lists.panix.com
> Financial Times - December 16, 1999
>
> ZIMBABWE'S ECONOMY 'NEAR IMPLOSION'
> By Stephen Fidler in Washington
>
> Zimbabwe's reserves have fallen to levels covering no more than a few
> days of imports, according to a British government assessment of the
> country's economic crisis. The assessment is an indication of
> mounting international concern over the deteriorating economy of the
> landlocked African state.
>
> Zimbabwe's government has denied there is a crisis, saying its
> economy is being battered by speculators and hoarders. But one
> British official said the UK considered the Zimbabwean economy "near
> implosion".
>
> According to the UK report, completed this month, the country's
> already substantial debt arrears could worsen if economic policies
> are left unchanged. It could lead to a suspension of the country's
> World Bank programme.
>
> In July, Zimbabwe negotiated a letter of intent for a $193m (£119m)
> standby credit with the International Monetary Fund, but the agreed
> programme was never implemented. The IMF and other lenders and donors
> have since suspended aid.
>
> The British assessment describes declining foreign exchange reserves,
> inflation above 70 per cent compared with an IMF year-end target of
> 30 per cent and a growing budget deficit, which Zimbabwe has been
> funding by printing money.
>
> It said Zimbabwe registered an unsustainable net outflow of $429.8m
> between January and October, leading to a desperate shortage of
> foreign exchange. The government had also been using reserves to prop
> up the Zimbabwean dollar at a level it implied was significantly
> overvalued.
>
> "The Reserve Bank's holdings of usable foreign exchange reserves are
> said to provide only 2-3 days' import cover," the report said.
> Government and state enterprises were in arrears to almost all
> creditors, though payments to the World Bank and IMF were within
> their grace period.
>
> The Reserve Bank borrowed $150m in November from a German bank in a
> loan secured by gold, but there was little left to increase reserves
> after debtors had been paid, the report said.
>
> The assessment said the budget deficit for this year was expected to
> be about 10 per cent of GDP instead of the 5.4 per cent agreed with
> the IMF in July. The overrun is due to a number of factors, including
> record defence expenditure that will be about 33 per cent over budget
> even before off-budget spending on Zimbabwe's participation in the
> war in neighbouring Congo has been taken into account.
>
> Peter Hain, the British Foreign Office minister with responsibility
> for Africa, said the UK was "very concerned" about the economic
> deterioration in Zimbabwe. In Washington this week for talks with
> officials from the US, the IMF and World Bank, Mr Hain said it was
> very important for Africa as a whole that Zimbabwe succeeded.
>