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Benny Tsododo
Recent pronouncements by the International Monetary Fund on Zimbabwe and Ukraine brought to the fore an instructive matrix that should lead the Southern African nation to reassess its engagements with the Bretton Woods institution. Like Zimbabwe, Ukraine had since 1994 intermittently engaged the IMF and received its support.
The support was always on condition that it undertook some austerity measures that included the removal of subsidies, the privatisation of social services and the severe slashing of the public service bill, the latter being a euphemism for a drastic retrenchment of civil servants.
In Zimbabwe, these rigid measures resulted in untold hardships as prices of fuel and other basic commodities spiralled out of the reach of the ordinary people.
Several workers were retrenched and the Zimbabwean dollar lost its value as hyperinflation took its toll on the besieged economy.
Despite these prescribed sufferings, the economy remained depressed and the promised economic fruits remained elusive. The economy became more vulnerable and in need of more financial support. With no doubt, the IMF prescriptions did nothing but destabilise the economic and political foundations of Zimbabwe.
On the part of Ukraine, the IMF remained aloof when the country was believed to be under Russia’s sphere of influence.
The IMF only acted when Ukraine become the darling of the West when its Russian-leaning president, Viktor Yanukovych, was deposed from power on February 22 2014 through an uprising.
Notably, after a regime change!
Almost two months after the ouster of Yanukovych, the IMF announced on March 27, 2014 that it had agreed with the new Ukranian authorities to an US$18 billion economic reform programme to be extended over a period of two years.
The Bretton Woods institution authoritatively declared that its gesture would unlock aid of around US$9 billion, as the Western institution and its acolytes are envisaged to chip in with support to the new Ukrainian government.
The bailout is clearly a signal to the foreign donor community. A positive signal from the IMF to foreign investors will unlock more support.
The IMF stands as the global commissioner of oaths of all financial transactions without whose approval a country will remain shunned by foreign investors and trapped in economic malaise.
The extension of IMF support to Ukraine did not come as a Houdini act.
It came as a result of massive lobbying and tacit support from Europe and the US, who pulled their strings to impel the IMF to advance the assistance to Ukraine.
After a meeting with his US counterpart, the German Foreign Minister, Frank-Walter Steinmeier, was quoted in the media as saying: “I hope the IMF stands ready to provide funds from a kind of emergency fund.” And the funds were indeed provided. Just like that!
It should be noted that no structural amendments were implemented in Ukraine prior to the conclusion of the deal, as per the IMF’s infamous tradition or as is being demanded of Zimbabwe.
Only the tacit support of the West facilitated the sealing of the financial assistance agreement between Ukraine and the IMF.
Coming back to Zimbabwe, it should be noted that on the same day the IMF was sending positive signals on Ukraine, it was churning out bleak statements about the state of the economy in Zimbabwe.
Foreign investors were getting a clear message on Zimbabwe. It was all gloom and doom.
Unlike Ukraine which got support without implementing any rigorous economic adjustments, Zimbabwe was told by the IMF mission to first implement some structural changes before it is even considered for support.
After grovelling for support for close to two decades, Zimbabwe appears to be in no position to secure it from the IMF.
The inescapable problem is not Zimbabwe’s presumed lack of financial prudence but its toxic relationship with Europe and the US. As has been witnessed in the recent IMF/Ukraine deal, the Western community wields the decisive power to approve IMF financial support to any country.
Unfortunately, Zimbabwe is not in good books with the West and its chances of ever getting support from the IMF are next to none.
As such, the dichotomous treatment of Zimbabwe and Ukraine by the IMF highlights some pertinent lessons.
The preferential treatment of Ukraine at the behest of Western nations indicates how the operations of the IMF are irretrievably enmeshed in the hegemonic foreign policy designs of Europe and the US.
In this case, the challenge for Zimbabwe is not to convince the IMF to offer it support but to disabuse itself of the notion that it will ever get assistance from the Western-linked financial institution under the current political circumstances.
In these circumstances, would it be wise for Zimbabwe to continue giving the IMF the leeway to conduct its so-called fact-finding missions that give birth to negative reports that give undesirable signals to investors?
Is Zimbabwe not complicit in building harmful economic perceptions about itself by allowing the IMF to conduct the periodic but barren fact-finding missions?
Considering its seemingly irreconcilable ties with the West, Zimbabwe should consider reviewing its relationship with the IMF.
Really, what would the IMF offer Zimbabwe now that it has failed to impart in the past decade?
As long as Zimbabwe does not reverse its land reform programme and economic empowerment and indigenisation programme, it will not only remain at loggerheads with Europe and the US, but also in bad records with the IMF.
It is indisputable that if Zimbabwe does not see a regime change, the IMF will remain aloof as it did in Ukraine prior to the toppling of Yakunovych.
The Bretton Woods institution will remain on the sidelines until a pliable regime is in power in Zimbabwe.
After all, the west has not hidden its desire for the MDC-T to take the reins.
We have seen unmistakable signals being sent during election time that if Zimbabweans were to vote for the MDC-T, the Western community would be generous enough to inject funds into the country’s economy.
On numerous occasions, the MDC-T has even boasted of being friends with the IMF and several of its string-pulling buddies, who are ready to dish out economic freebies to Zimbabwe on the change of government.
On this submission, it would be prudent for Zimbabwe to review its inefficacious contacts with the IMF in the interest of its sovereignty.
Online Reporter