Is Mthuli Ncube IMF’s man in Harare?

TIM RAINHARD

The International Monetary Fund (IMF) released its 2019 Article IV report on Zimbabwe at the end of March 2020.

Without delving into policy details, which I leave to experts to unpack, one can observe the now expected but certainly unacceptable attempt by the Fund to play “good cop and bad cop” on Zimbabwean authorities.

Throughout the report, it’s quite observable that the Finance ministry is showered with praises for pushing through a fiscal consolidation process whilst the Reserve Bank of Zimbabwe (RBZ) is seen as responsible for the policy missteps and delays in currency reforms, and hence is liable for the problems facing the nation.

The key question arising from this is whether Finance minister Mthuli Ncube is being praised because he is doing a very good job for Zimbabweans who should be the ultimate arbiters; or he is serving some other bigger non Zimbabwean interest at the expense of the domestic economy and his appointing authority?

The answer lies in how Ncube has and continues to aggressively pursue neoliberalism which favours the Bretton Woods institution’s imperialistic agendas with the blind zeal of a proverbial house nigger.

This is despite it being as clear as daylight that his neoliberalism, agenda is pushing the economy into recession and the general populace into poverty.

Acres of literature have been devoted to the role of neoliberalism in perpetuating the servitude of developing countries through raising and praising a small clique of schooled but unlearned zealots of western interests from among the downtrodden.

Coming to the specifics, the minister — as the IMF’s and, by extension, United States’ point man in driving their hegemonic ambitions in Zimbabwe — has to be portrayed as the good guy who is being derailed by a bad governor at the RBZ. This same line of thinking is also observable at the local offices of IMF, the African Development Bank (AfDB) and World Bank.

The latter two, which are an extension of America’s umbilical cord, usually come out at opportune times, when the minister is under pressure, with positive comments about his policies as well as real Gross Domestic Product (GDP) projections that are out of sync with the reality on the ground.

This is all done to project a positive image of the minister and the same narrative can be seen throughout the IMF report.

To digress a bit but in a related context, the truism that unfortunately continues to evade most Zimbabweans in particular and Africans in general lies in what the Americans have always said as justification for renewing sanctions on Zimbabwe.

At every opportunity, the United States’ foreign office describes Zimbabwe, a small landlocked African country, as “posing an extraordinary threat to American foreign policy”.

With neither nukes nor biological weapons, it becomes clearer that the ideological principles of sovereignty over own resources that former president Robert Mugabe vigorously championed until his last breath are considered as really threatening by the Americans.

They had hoped that the new dispensation would abandon these values that informed the liberation struggle and sing for their supper, which has not been the case as President Emmerson Mnangagwa is equally unflinching on these national ethos.

It is therefore not far-fetched and hardly surprising that the same Americans are taking advantage of their hunting dog institutions such as the IMF and the World Bank to support and extol purveyors against inclusive macroeconomic management.

This is done as part of a wider agenda of killing African innovativeness, economic sovereignty and the black empowerment agenda, which is Africa’s only hope of breaking from the yoke of underdevelopment.

These institutions know that the generality of Zimbabweans feel intimidated when they hear the AfDB, World Bank and IMF speaking and would dare not challenge their views and/ or projections.

To this extent, they even resort to naked lies and projections informed more by crystal balls and not economics simply to convince Zimbabweans that all their suffering at the hands of Ncube’s pointless austerity measures is for their own good.

For instance, it is clear that the projected 0.8% real GDP for 2020 by the IMF is unrealistic, even before the impact of Covid-19 is taken into account, but it is meant to project the Finance minister as doing fantastic and give Zimbabweans false hope, while keeping the country away from true macroeconomic freedom where domestic resources benefit the domestic population.

The analysis of fiscal numbers done by the IMF lends credence to the above as they dishonestly excluded government-directed quasifiscal expenditures from the government numbers so that they portray a positive picture of a minister who has done well in terms of fiscal consolidation.

Yet, in terms of accounting practices, all subsidies should be on account of government.

This includes payments made for the purchase of grain from farmers and other payments made to support parastatals such as power utility Zesa Holdings.

It would be unfair to reality and to posterity not to mention that the subsidy losses that the purveyors of the revered IMF’s propaganda embarrassingly chose to ignore arose from the Ministry of Finance’s gross incompetence when it presented budget proposals before Parliament by failing to budget for grain purchases in a drought year, underfunding the all-important health sector and recklessly neglected paying for electricity imports notwithstanding the fact that they are now collecting duty and other taxes in foreign currency.

This, it now seems, was deliberate so that the IMF can have grounds for blaming the RBZ for the resultant imbalances.

Interestingly, the IMF, in its report, finds it convenient to pile all those losses on the central bank’s figures in order to unfairly portray the institution as the demon standing in the way of the angel Ncube.

Without the losses arising from Ncube’s negligence, the central bank figures would have yielded a different picture from the desired outcome.

Similarly, the RBZ is blamed for monetisation of the budget deficit, which the Fund says created challenges for fiscal sustainability, inflation stabilisation and preservation of the external value of the domestic currency.

One would be tempted to ask if the RBZ is printing money to fund its own coffers.

If it is funding central government, then the source of the problem should be the fiscus.

A central bank cannot print money just for the sake of printing.

Surely if the RBZ was printing into its own coffers, then the Zimbabwe AntiCorruption Commission (Zacc) would have descended on its officials like a ton of bricks.

Only the uninitiated in the area of macroeconomic management and inflation are oblivious to the now widely-held fact that inflation is invariably a political disease as the need for funding emanates from politics.

Politicians, including Ncube, fear that having a market tariff for electricity may result in loss of support.

Similarly, they subsidise the price of fuel so that transport fares remain affordable. In these cases, the subsidies are not budgeted for by Ncube.

It is these unbudgeted expenditures that result in money supply growth, inflation and ultimately impact on the value of the domestic currency.

The IMF staff are fully aware of the direction of causality and the fact that these issues are generally beyond the control of the central bank.

It is, however, not in their interest to blame the minister for anything. Otherwise they attract the wrath of the real owners of the IMF and lose their jobs as a consequence.

A classic case of singing for one’s own supper. In the IMF’s report, which is more political than policy, the central bank is also blamed for keeping “domestic interest rates well below inflation”.

Holders of PhDs from the Fund surprisingly chose to assume elementary understanding of economics and ignore the implications of high interest rates on the productive sectors of the economy facing deep-seated stagflation.

This is a practical policy dilemma for policymakers the world over. Should one increase rates when the economy is on a downward trend?

Zimbabwe is experiencing both high inflation and declining real GDP at the same time. Simply increasing interest rates would obviously collapse the economy.

Not only does this not expose the bias by the Fund, but also the serious shortcomings of its policy prescriptions, which have outlived their usefulness and practical applicability.

Ironically the Fund has never advised African countries to add value to their products so that they can generate two or three times more revenue or export receipts.

In all cases, we are asked to cut down on expenditures or compress imports.

Those who control the Fund require cheap raw materials and do not want to see an industrialised African continent, hence the measures are always aiming at keeping Africa as unsophisticated as possible.

The IMF’s imperialistic agenda is a matter of public record as the austerity measures implemented under its programmes partly influenced by the policy choices that it imposes on countries cause great suffering, poorer standards of living, higher unemployment as well as corporate failures.

Dr Tim Rainhard has studied the work of some of the international financial institutions in developing countries. He is an economist with extensive knowledge on Africa’s financial systems. He can be contacted at timrainhard97@yahoo.com

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