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Media paranoia bad for IMF/Zim ties
Eric Bloch
February 03, 2006

http://www.theindependent.co.zw/news/2006/February/Friday3/eric.html

UNTIL the late 1990s, the Zimbabwean government proudly asserted its membership of the International Monetary Fund (IMF). It waxed eloquently on the policies and activities of the IMF and unhesitatingly availed Zimbabwe of IMF funding, both by way of balance of payments support and by way of the concessional interest poverty reduction and growth facility.

To a major extent, Zimbabwe’s oft-expressed appreciation of the IMF and its policies was driven by a rapacious hunger for funding, but to some not insignificant extent, it was also because the IMF did not publicly voice criticisms of any of Zimbabwe’s economic and other policies, of its fiscal management (or mismanagement), or of its monetary systems and their management.

But, when the Zimbabwean government set the country upon a path of self-destruction and pursued that path with increasing vigour, the IMF was bound to advise the government against its foolhardy, apocalyptic measures. However, those advices were not well received, and were cavalierly dismissed as naught but anti-government bias.

Suddenly, after 17 years of pretended admiration for the IMF and cooperation with that organisation, the government could only speak ill of it. Setting the example, President Robert Mugabe caustically rejected all the well-intended advices of the IMF, and increasingly contended that Zimbabwe could successfully "go it alone", without IMF monies and advices.

Unhesitatingly, the president’s myriad of sycophants played the same tune, and were very soon strongly supported in their vilification of the IMF by the state-controlled media, which has demonstrated an immense and unending ability to change its opinions according to the whims of its masters.

Over the last seven years the Zimbabwean economy has plummeted to its lowest levels, inconceivably worse than even the greatest opponents of the government could have anticipated. This is almost wholly due to the endlessly damaging acts of commission and omission by the Zimbabwean government.

Progressively, government has destroyed agriculture which was the very foundation of the economy, demolished much of the industrial economy, caused overwhelming contraction of tourism and stagnation of most of the mining sector. Concurrently, government has impoverished the state’s coffers through profligate spending of immense magnitude, with very little of the expenditures being nationally beneficial.

There were endless fiscal outflows for luxurious motor vehicles, non-required military aircraft and numerous unnecessary ministries, only to assure "jobs for the boys" and their ongoing support and the like. Corruption abounded, unimpeded by the state, despite numerous protestations by government of its intent to quash corruption.

Civil servants were under-remunerated, with consequential demoralisation and demotivation, resulting in the inevitable decline of efficiency within the public sector. Parastatals become ever more ineffectual, increasing millstones to be supported by the insolvent fiscus and the gross domestic product (GDP) has shrunk dramatically, while the state’s deficit surged both in real terms and as a percentage of GDP.

The IMF would have been in default of its duties and obligations to members, in terms of the Bretton Woods agreement and the IMF constitution, if it had not advised Zimbabwe of the devastatingly negative and adverse economic, fiscal and monetary policies being pursued, of the inevitably catastrophic consequences, and of alternative and more constructive policies that should be considered and implemented.

However, to a government with a deep-seated belief in its own omnipotence, those advices were unpalatable in the extreme, and therefore unhesitatingly and abusively rejected.

Those rejections were strongly supported by unfounded, mythical contentions that Zimbabwe was the victim of a British and American-led conspiracy against Zimbabwe’s ruling party, that Britain had a profound desire to recolonise Zimbabwe, and that Britain, the US and their allies were deliberately undermining the Zimbabwean economy with diverse strategies, including non-existent economic sanctions.

As the economy continued on its endless collapse, government became less and less able to service its international debt in general, and its indebtedness to the IMF in particular. Being unable to admit to its default, and to its inability to honour its obligations, the Zimbabwean government intensified its outpourings of vitriol against the IMF. Remarkably, that body demonstrated immense maturity, diplomatically disregarding most of the slights and abuse, and continuing to fulfil its constitutional obligations to Zimbabwe.

However, as payment default continued, the IMF had no alternative in terms of its constitution, but to suspend or terminate Zimbabwe’s membership. It considerately took the lesser alternative, but that did not prevent intensified Zimbabwean embitteredness, evidenced by constant government outbursts against the IMF and strongly supported by invective from the state-controlled media.

Then the Reserve Bank of Zimbabwe (RBZ) got a new governor. He was very aware that Zimbabwean international creditworthiness, being a prerequisite for lines of credit and for foreign direct investment, required that Zimbabwe resume payment of overdue foreign debt as expeditiously as possible, and restore harmonious relationships with the international monetary community, including the IMF.

In his first and subsequent monetary policy statements, he placed great emphasis upon the need for Zimbabwe to demonstrate its unlimited intent to honour all its debt obligations. He also worked assiduously to repair the damaged bridges between Zimbabwe and the IMF, interacting with the IMF regularly, and facilitating that body’s compliance with its constitutional obligations of annual evaluation of member state’s economies. Progressively, with the exception only of the president of Zimbabwe, the poisonous attacks by the Zimbabwean government and its media diminished.

Then in mid-2005 an international hype developed ahead of the September 2005 meetings of the IMF board of directors and the IMF annual general meeting shortly thereafter. Suddenly there was widespread speculation that, because of its arrears in debt settlement, Zimbabwe would be expelled from the IMF.

The likelihood of expulsion was remote in the extreme, for 85% of all votes at the annual general meeting would be required for expulsion. Even the great voting power of the US, the United Kingdom and other major members of the G8 would not suffice to bring about the termination of Zimbabwe’s membership.

Reactive to that hype, Zimbabwe’s state-controlled media eulogised and rejoiced when expulsion did not occur, making great play on the commendable and considerable reductions of debt that Zimbabwe had achieved shortly prior to the meetings. Suddenly the insinuations were that not only was all well between Zimbabwe and the IMF, but that Zimbabwean membership of the IMF was beneficial, and of importance, to Zimbabwe.

However, that change in attitude was short-lived. Only four months later an IMF team arrived in Zimbabwe on a scheduled visit, to carry out its constitutional Article IV evaluation. Only a week prior to the team’s arrival, there was very clear evidence of continuing Zimbabwean economic collapse.

Annual inflation had soared to above 585% in December 2005 (and expected to exceed 800% by March 2006) and had escalated the poverty datum line to over $17 million for a family of six, more than five times the minimum wage level.

Shortages of basic commodities were becoming increasingly pronounced and government contentions of economic turnaround were hyperbole, fable and fantasy.

Rapidly, the upper echelons of government and its propaganda resources realised that no matter how commendably Zimbabwe is striving to address its debt obligations, and in spite of the fact that, albeit belatedly, some economic deregulation required for an economic transformation had been embarked upon, the IMF team would inevitably form some very negative opinions of much of the state of the economy and of the policies responsible for that state. Even if the IMF evaluation gives appropriate recognition to the few positive developments of recent months, it must also express concern on some appallingly continued policies.

Recognising this, with its endemic paranoia of unwanted actions by, and criticisms from the IMF, the propaganda machine went rapidly into motion. Within days of the arrival of the IMF team, the state-controlled media cited an "impeccable" but unnamed source alleging outright, and through implication and insinuation, that the IMF evaluation was predetermined prior to the team’s arrival, and would be condemnatory.

Realising that Zimbabwe cannot attribute such condemnation to IMF castigation of the country’s debt servicing, the state-media is now striving to suggest that the IMF, and those it represents, "tend to shift goal posts when it suits them". This has no credence, because the past IMF criticisms were founded not only upon Zimbabwe’s debt arrears, but also upon its fiscal and monetary policies.

That does not disturb the media, for it believes that pre-emptive disinformation, sufficiently reiterated, becomes accepted as fact. So it is allowing its IMF paranoia to place in jeopardy the relationships of Zimbabwe with the IMF.

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