HomeOpinion & AnalysisDiscordant voices impact on sovereign debt resolution

Discordant voices impact on sovereign debt resolution


The time to implement the strategy sounded suspiciously offside. Within six months, Zimbabwe has committed itself to pay back
$1,8 billion of its sovereign debt at a meeting with its creditors on the sidelines of the October 2015 World Bank-International Monetary Fund (WB-IMF) conference in Lima, Peru. How realistic is this commitment? Government struggles to pay salaries, let alone the civil service 13th cheque that is imminent. It has also incurred a huge domestic debt crowding out the productive sector off the money market.

By Tapiwa Nyandoro
mugabe 11

At least $130 million may come from the IMF-issued Special Drawing Rights. What of the rest? According to Treasury reports from Lima, the payment of the $1,8 billion will trigger “the development of a New Comprehensive Country Financing Programme supported by the African Development Bank, the IMF and the WB that attracts long-term financing to promote (economic) growth and debt sustainability”.

The verbosity tells you something may be wrong. The key issue is what structural reforms are going to be implemented to create fiscal space, grow the economy and make whatever debt the country has, or accrues, sustainable.

Unless quantifiable detail on fiscal reforms is given, the sum total of the above verbose statement is that Zimbabwe is going to borrow some more to pay off International Financial Institutions’ (IFIs) debts, and end up worse off than it is today. The IMF shares the same concern, warning that Zimbabwe still has the task of demonstrating a strong track record of reforms under the IMF’s 15-month Staff-Monitored Programme. Treasury needs not be economical with the truth, for the truth is meant to set it free. What, in detail, are the reforms Treasury has up its sleeves?

Finance minister Patrick Chinamasa is desperate to pay off the $1,8 billion for very obvious reasons. One honest way is to trim fairly the bloated government bureaucracy, leaving only bare essentials. But his approach to date has met an insurmountable hurdle. His Excellency the President has reversed his progressive initiatives at every turn.

What could he be doing wrong? Or is the President simply missing the bigger picture?
Early this year Treasury, with the then Minister of Media, Information and Broadcasting Services, Jonathan Moyo, in attendance, held a Press conference at which government declared that civil servants’ annual 13th cheque would be no more. That statement was robustly and publicly retracted by none other than the President a short while later.

Undaunted, however, State universities were the next target. Last week NewsDay reported that Higher and Tertiary Education minister, now the same Jonathan Moyo, had “rapped overzealous Treasury officials for unilaterally cutting government salary grants for staff at State universities by 50%”. Again the aggrieved minister had to call on the President who reversed Treasury’s actions.

A punitive customs duty tariff had also been imposed on imported books by Treasury much to the chagrin of the Ministry of Higher and Tertiary Education. That, too, was reversed.

These reversals suffered by what should be government’s most senior of ministries inevitably raise questions such as the following:

●Is there a “parallel” government to which the minister or his colleagues are members of, as obtains in most failing or failed states? That could explain the acrimony in Cabinet. If so, it is bad news for the ailing economy.
●Is the minister competent at managing up and does he have the requisite social skills of consensus building required by his post?

●Does Treasury lack the technical skills and tools of budgetary control? Increasingly, spending decisions seem ad hoc.
Resources are also stretched too thin even at budget time to a point where they are ineffective and for all intents and purposes lost. The President may be looking for a champion(s) to drive the point home. Since the language of the boardroom is finance, Treasury is the most obvious platform for such an initiative, which could identify the reforms IFIs expect. Is Treasury, and its minister, up to the task of producing a holistic strategy? Concluding the land reform programme properly within an international framework could unlock some $5 to $7 billion as funds inflows. That could revive the economy.

●Or, is the natural and inevitable burden of age now overtaking the President? If that is the case, he needs a rest. He has “fought the good fight and (long) finished the race”. Like the biblical Moses, he may, God willing, live to a ripe old age of 120 years. Zimbabweans, an ungrateful lot, must however, learn to say thank you, not only to the President, but to all public servants and ministers (in particular), with 30 or more years of continuous public service. The ball is in Treasury’s court, in the light of inadequate pensions post hyper-inflation to suggest exit packages such as titled land and shares in State-owned companies in lieu of pensions.

●Is the Cabinet, individually or collectively, of the right calibre? Distributing sex-enhancing pills at rallies suggests there could be a problem.
●Is Cabinet, like the ruling party, paralysed by a cultural collapse, factionalism, and succession politics?
Whatever the case may be, before the sovereign debt resolution strategy can be implemented in earnest, the above housekeeping issues need resolution. There must be one Cabinet and it must in public speak with one voice.

That requires a time-framed and costed roadmap for the reforms that must bind all ministers and the Presidency. The discordant voices emanating from government are a massive turnoff for most would-be investors and prospective financiers. Disunity repels money and progress. A house divided falls.

Recent Posts

Stories you will enjoy

Recommended reading