US$961m windfall: Pay fees before splurging on booze
THE Zimbabwean government is gradually allowing various sectors of the economy to re-open following long periods of Covid-19-induced slowdown and closure.
Like all facets of life, the economy cannot remain mothballed in perpetuity. To be sure, it will not be business as usual; new strategies must be devised. The world has changed — and Zimbabwe must change with it.
But the post-Covid narrative on the ground is generally dispiriting. Everyone across the board — whether in government, private sector, civil society or labour — is still waiting helplessly for a knight in shining armour to swoop in and save the day.
The sooner everyone discovers that there is no messiah, the faster we can seriously embark on the onerous task of building an economy that delivers fair opportunity to all. The International Monetary Fund’s injection of US$961 million in Special Drawing Rights is a fantastic development for the economy.
Apart from infusing a much-needed feel-good vibe, it presents a real chance for pragmatic economic stabilisation.
A lot has been said about how the government must carefully organise its priorities with regards the utilisation of that sizeable windfall. It stands to reason that the ordering of these priorities will boost confidence in Zimbabwe’s determination to chart a new path to economic recovery.
On the macro-economic front, it is crucial to stabilise the Zimbabwe dollar, which has come under strain. This week, the local unit weakened against the US dollar on the official market. On the parallel market, the Zimdollar has significantly lost value, further denting public confidence in the local currency.
The ever-widening gulf between the official rate, at about US$1:ZW$86, and the alternative rate, at US$1:ZW$150, is a cause for concern and requires decisive action. Decisive action is a function of good governance, policy consistency and astute leadership. It is not a propaganda imperative.
A post-Covid-19 recovery strategy needs not only workable ideas but also massive funding. Last year, Finance minister Mthuli Ncube announced an ZW$18 billion stimulus and economic rescue package. Nothing has come of it.
The sticking point, as The NewsHawks has correctly reported, is that the government expects private sector companies to approach banks and hammer out commercial agreements on how the loans can be structured.
Although it is difficult to heap all the blame on the government for assuming such a posture, we must realise that private companies in this country are largely bankrupt. Many were already technically insolvent even before the outbreak of Covid-19 in March last year. The pandemic has plunged businesses into ruinous bankruptcy.
Bankrupt and highly indebted companies have no realistic capacity to take out further loans. On the other hand, Treasury is alive to the dangers of dishing out money to the private sector and exposing the taxpayer to hefty liabilities in the event of default.
What the situation demands is a win-win arrangement between the private sector and the government to ensure that the so-called stimulus package is made accessible — but without recklessly exposing taxpayers to toxic debt.
Beyond shoring up the fragile local currency and lending a helping hand to the private sector, it is important to ensure that pro-poor policies are implemented without further delay.
Social safety nets are virtually non-existent. The terrible economic hardship suffered by pensioners, orphans, entrenched breadwinners and dejected youths is a ticking time bomb.
Urban poverty is deepening, drug abuse among young people is worsening, teenage pregnancy and child marriage are on the rise. Any post-Covid-19 plan that ignores these pressing needs is a waste of time and poses an existential threat to national survival.
Like a long-suffering worker who suddenly receives a paycheck after six months of toiling without a salary, the Zimbabwean government must think clearly before wasting the US$961 million IMF windfall on useless expenditure.
The government, just like the poverty-stricken taxpayer, must pay its school fees and replenish the family pantry before splurging on a crate of beer.