Finance minister Patrick Chinamasa’s planned move to pay $1,1 billion towards settling Zimbabwe’s World Bank dues is “criminally irresponsible and treasonous”, former Finance minister Tendai Biti has said.
He said the intended payment will be made on the back of a moribund economy characterised by massive deindustrialisation, absent aggregate demand, chokingly high government expenditure and a crippling liquidity crisis.
“The repayment of the loan to the World Bank is therefore criminally irresponsible and treasonous,” Biti said.
Chinamasa has said Zimbabwe has met all conditions to clear arrears to the World Bank and African Development Bank (AfDB), paving way for possible fresh lending from the International Monetary Fund (IMF).
The Treasury chief said facilities negotiated by the Reserve Bank of Zimbabwe to repay the $1,75 billion arrears had been “scrutinised and scrutinised” by the World Bank and AfDB, who were both satisfied.
“Clearance of debt arrears is expected to open the door to foreign finance inflows and possible debt treatment by the Paris Club and non-Paris Club Bilateral Creditors through an IMF financing programme,” Chinamasa said.
He did not give details on where the cash-strapped President Robert Mugabe government obtained the money from, though, reports suggest they borrowed from Singapore-based global commodities firm — Trafigura Group.
But Biti — opposition People’s Democratic Party leader —argued: “The money would have been a major fiscal stimulus in the economy, injecting resources needed to resuscitate collapsing industries thereby creating much-needed employment amongst the huge pool of the jobless poor in Zimbabwe.”
He said the money must have been directed to the Distressed Industries and Marginalised Areas Fund (Dimaf), Zimbabwe Economic Trade Revival Facility (Zetref) and other major capital projects, including rehabilitation of the collapsing transport network.
“Repaying the very rich World Bank at a time when 3 million Zimbabweans are receiving food aid is a shocking betrayal to the struggling masses of Zimbabwe,” Biti said.
The payment of the money to the World Bank is in line with the October 2015 Lima plan agreed in Peru.
In terms of the plan, the international community agreed that Zimbabwe must pay the financiers for it to be eligible for fresh funding.
“We argued then as we do now that the Lima plan is a disaster which will not work,” Biti said.
“It is a disaster for the IFIs and the international community to engage Zimbabwe without structural reforms.”
He said Zimbabwe must reform the wage bill which has ballooned owing to the ghost workers “who are part of Zanu PF’s election rigging infrastructure.”
He also called for the “rationalisation and retrenchment of the government expenditure which is dominated by executive travel abroad and financing of Zanu PF activities; crafting a new Mines and Minerals Act; crafting a new diamond policy to deal with transparency, value addition and gem retention proportions, repealing the Indigenisation Act to promote Foreign Direct Investment and capital inflows and addressing the cash, liquidity, currency and banking crisis crippling the economy.”
“We argued then as we do now that the Lima plan would fail as there are no reformers in Zanu PF, it is therefore impossible to have reform without reformers. On this call we have been thoroughly vindicated,” he said.
“On the political side, human rights violations are on a rise, Zanu PF has re-introduced the training of its terror militias; in the past year many activists were arrested, tortured, with some abducted and injected with an unknown substance.”
Biti said “it would be wrong, immoral, dishonest and criminal for the international community to engage Zimbabwe before clear evidence of an irrevocable process towards political reform.”
“Our contention is that Zimbabwe must not be allowed to have any fresh lines of funding without attending to both political and economic reforms.”
He said by accepting such payment, the IFIs “are complicit, aiding and abating Zanu PF’s power retention agenda”.
“We are aware that the World Bank has in the past sided with dictators, recycling autocratic regimes on the African continent and indeed Latin America. We appeal to the World Bank to stop these shenanigans,” he said.
Since Zanu PF took over sole custody of the economy in 2013 after the stability-inducing inclusive government, the economy contracted by 30 percent in such a short space of time with unemployment reaching 95 percent.
At the same time, poverty levels have increased, 75 percent of Zimbabweans are now living on less than $1,25 per day.
Recently, financial institution AfrAsia in its latest survey classified Zimbabwe as the poorest country on the African continent.
“We attribute this to the voodoo economics of Chinamasa,” Biti said. Daily News