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Zim's 'econo meltdown' fears
29/07/2005 20:57 - (SA)
Johannesburg - Unusual and desperate public appeals to South Africa, China and even impoverished Namibia for help have raised new fears Zimbabwe's battered economy is moving inexorably toward meltdown.
Zimbabwean economists and political analysts suggested on Wednesday that President Robert Mugabe's increasingly autocratic government fears it can't survive unless it can find a way to stop the economic decline.
Part of the new pressure comes from the International Monetary Fund, which last week called in Zimbabwe's $900m debt, raising fears Zimbabwe could be expelled from the IMF.
"This place is so bankrupt that even $10bn now would not save Mugabe," said Zimbabwe University political scientist John Makumbe.
Despite government assurances last week that an economic turnaround was on track, Mugabe asked South Africa for a loan of $1bn and traveled to China to seek a line of credit from Beijing.
Mugabe's trip to China ended with some computers, vague announcements on business deals, loans to buy two electrical generators and about $6m to buy food.
President Thabo Mbeki has signaled that his policy of "quiet diplomacy" with Zimbabwe could be coming to an end.
Mbeki said a loan would be conditional, among other things, on Zimbabwe committing to a stable monetary system. Its dual currency market would have to be reviewed, he said.
But even with conditions, the loan is politically unpopular in South Africa, where opposition parties have campaigned against it, arguing the money should be used to help legions of poor at home.
Mbeki criticised Zimbabwe's reserve bank for funding parts of Mugabe's demolition and eviction campaign, calling it "beyond the normal function of a reserve bank."
Zimbabwe has been on the brink of economic meltdown for years, largely because of what donors and Western governments call gross mismanagement, corruption and a complete lack of fiscal discipline.
The dramatic slide began with payments to war veterans that the government couldn't fund and then was heightened by a land reform program that virtually destroyed Zimbabwe's agriculture which had been its major foreign currency earner.
Today, it has reached a state that "has never been worse by the look of things," said Tony Hawkins, a professor of economics at the University of Zimbabwe School of Business.
"But economies don't collapse, they stagger on."
John Robinson, a private economist in Harare, said Zimbabwe's gross domestic product had fallen by 50% over the last seven years and was still shrinking.
He predicted the annual inflation rate would rise to 1,000%.
Robinson said Zimbabwe should be compared with Somalia, which has existed in political and economic anarchy since 1991.
"That is the direction we are headed if we don't change course.
"A country can become ungovernable if even the government can't get around."
- Dow Jones
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