Is the IMF being unfair or realistic?

update on what the Bretton Woods institution makes of the economy and the usual prescription on what Government needs to do to aid economic recovery.
The team, headed by Vitaliy Kramarenko, was in Zimbabwe from March 16 to 30 to conduct the 2011 Article IV consultations, which are statutory visits that the IMF carries in all its member countries.
Meetings were held with Prime Minister Morgan Tsvangirai, such ministers as Mr Tendai Biti for Finance, Economic Development and Investment Promotion Mr Tapiwa Mashakada and Reserve Bank of Zimbabwe Governor Dr Gideon Gono.
Representatives from the diplomatic and business communities, labour unions and the civil society also met with the IMF team.
The overall report released on Monday acknowledged efforts being made to stabilise the economy and developments on the social and political front but highlighted areas which the team felt needed due attention to take the economy forward. But I found the headlines on two stories we carried yesterday on the IMF very illustrative.
On Page 1 of the Herald Business the anchor headline on the IMF’s report on Zimbabwe read:” No resumption of lending, says IMF” and on Page 2 we had a Ugandan story which was headlined “Uganda prospects good, needs fiscal reform: IMF”
The immediate impression was that there was not much positive developments to talk about in Zimbabwe while for Uganda, the country was said to be on the right track, only needing to spruce up here and there. Otherwise that economy was given thumbs-up.
We will not go deep into analysing the economies of the two countries and their respective backgrounds but I found the two headlines telling.
Zimbabwe has always felt done for by the international lender, which has often seemed too harsh when dealing with this country and yet exhibits an unfamiliar soft spot for other nations who may actually be worse off in terms of what they owe the institution or efforts on the ground to stabilise their economies.
For Zimbabwe we have sometimes found the advice to be out of touch with what is on the ground although in some instances some of the observations are quite progressive.
One issue is the contentious civil service wage bill, a fact that the IMF has always mentioned as one constraining Government’s ability to fund capital expenditure.
While we may agree with them that the civil service is a bit on the bloated side, the IMF have often implied that these guys should not get an extra cent on their salaries.
This happening when civil servants are presently demanding a significant hike to beef up their pockets, and they have industry on their side.
A richer civil servant translates into a better market for providers of goods and services.
But the IMF’s rationale on streamlining the service is worth thinking about.
A leaner, more efficient and well-remunerated civil service should do the trick for this economy.
There is congruency on the result of civil service reform although Government may somewhat differ with the manner with which this should be done. Of course, the IMF has never been known to have a heart when it comes to giving prescriptions. Just think of the Esap era. And yet some of its prescriptions may seem well-intended at face value
However, such vices as corruption and bribery will become a thing of the past if systems operate efficiently. No one would need to bribe anyone to jump the queue at the passport office or some such office, if these documents were produced in the most energy and time-efficient manner.
In its latest statement, the IMF also advised on the need for Zimbabwe to synchronise its policies in terms of what it termed “fast-track indigenisation of the mining sector” and other factors that could retard growth this year.
While this is all well and good, the IMF does not seem to be a sincere advisor. It has failed to chip in with tangible assistance when Zimbabwe needed its hand the most.
I remember five years ago how RBZ Governor Dr Gono frantically pulled all stops to pay a substantial amount towards the country’s debt to the IMF in a bid to restore Zimbabwe’s voting rights and the attendant benefits.
It was almost a given then, that Zimbabwe would not get the wooden spoon but would instead become the full member it is supposed to be with its voting rights restored. Unfortunately, politics emerged stronger that simple reasoning and Zimbabwe was left stranded.
In fact, all hell broke loose in the Western world as to the source of funds for the repayment, as if to say the powers-that-be had made sure Zimbabwe would not be able to repay, giving credence to any drastic measures they had already fashioned against this country.
Of course, in 2009 we were a beneficiary of US$500 million of the funds distributed to all members to cushion them against the vagaries of the global financial crisis.
But Zimbabwe could have benefited from more balance of payments support to ameliorate the present funding challenges confronting the economy.
Of course, we can use some of the advice from the global lender but it could leverage the economy better through provision of funds. To the IMF, Zimbabwe is presently not a bankable project but this becomes a chicken and egg situation where you may need the chicken to produce the egg or vice versa.
A developmental institution should be able to weigh the options and look at the situation on the ground to see how best it can be helped.
Of course, this could happen where politics is not so much at play as is the case for Zimbabwe. In the interim, the country needs to continue following a path that will yield results as we hope that one day we will be in a position to receive such assistance from the IMF or even reach a point where we will turn down such offers because we will have become that big. We have the resources and the brains to do it and the last time I checked God said His plans were to prosper Zimbabwe and not to harm it!
In God I trust!
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