Zimbabwe, Economic Instability and the IMF

The latest period of economic turmoil in Zimbabwe could not have come at a worse time for 92 year old President Robert Mugabe. Economic hardship has forced protestors out onto the streets of Harare in violent clashes with police, whilst an internal political struggle over who should succeed Mugabe continues. Severe cash shortages faced by the ruling Zimbabwe African National Union – Patriotic Front (ZANU-PF) government has forced rapprochement with international financial institutions, as new conditional loans from the International Monetary Fund (IMF) are sought for this coming September. Yet several questions, including whether Zimbabwe can meet the required IMF criteria for the loans, remain unanswered.

 

Acts of defiance and violent protests are rare in Zimbabwe. The hegemonic presence of Robert Mugabe may have dissuaded millions from protesting in the past. However, clashes on 4 July are the latest indication of the changing material conditions within the country, as protestors in the eastern suburbs of Harare – angered by  ‘police harassment’ – launched stones at riot police. This incident was the latest in a string of recent political disturbances. Last Friday, a warehouse was burnt on the border between South Africa and Zimbabwe in protest over a government ban on certain imports. Doctors and other public sector staff have also planned to strike in protest over the late payment of June salaries.

Zimbabwe’s economic instability has been assigned to, amongst other things, the devastating effects of climate change in the region. In May, The IMF pointed to ‘drought, erratic rains, and increasing temperatures, [which] have reduced agricultural output and disrupted hydropower production and water supplies.’ Economic analysts have pointed to potential shortages of food and fuel in particular.

Mugabe’s government has done little to ease the worries of the population. The recent ban on imports is likely to accelerate shortages and inflation, whilst the climate for foreign direct investment remains distinctly unattractive. Rapprochement with international financial organisations has meant a decline in anti-Western rhetoric from leading political figures, as Zimbabwe has been forced by circumstance into asking for a loan of over $1 billion from the IMF. Zimbabwe had been praised for its reforms and cuts to the budget deficit during 2014 and 2015, however, the conditionality of international financial agreements has raised questions over whether the loan will materialise. In particular, there are concerns over the lack of transparency in government finances and the already significant national debt.

A crucial component of ZANU-PFs strategy for meeting the conditions of the potential IMF loan is to relieve financial pressures in the public sector, particularly in the civil service. However, as argued by Liesl Louw-Vaudranradical cuts would be political suicide; the swollen civil service following the 2013 elections was a way of rewarding those loyal to the ruling party. The fear of loosing the support of important officials at a time of infighting within ZANU-PF adds to the political instability of the country.  The reformist wing led by Vice-President Emmerson Mnangagwa and the ancien régime led by Mugabe and his wife, Grace, are seemingly distracted by the battle for succession, as the country descends into economic uncertainty. Political questions, rather than economic, will continue to shape Zimbabwe’s immediate future.

Zimbabwe, Economic Instability and the IMF

One thought on “Zimbabwe, Economic Instability and the IMF

  1. The Smiling Pilgrim says:

    Sending all the best wishes to the people of Zimbabwe.

    Hopefully they continue to stabilize and prosper 🙂

    Like

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