Zimbabwe’s new Finance Minister, Tendai Biti, says the government has survived on taxes and duties paid imports such as alcohol and cigarettes. According to Biti, 88% of Zimbabwe’s revenue is based on these taxes. Biti is a newly appointed official in the new unity government and is a member of the MDC. Biti suspects the annual revenue for 2009 will come in at about $1 billion, $700 million less than initial projections made by the former Finance Minister, a member of the Zanu-PF party. Biti also projects spending for the year will be $1.9 billion, generating practically $1 billion in deficit just this year. Economists blame the 29-year reign of President Robert Mugabe for the economic collapse citing his skewed government policies, violent reallocation of land, and corruption in his cabinet as the main causes. To compact the problem there has been overspending by the government due to continued printing of the Zimbabwe dollar, which has now been replaced by the American dollar. Zimbabwe’s only hope is to ask the international community to help out, relying on the creation of the coalition government to provide legitimacy to the country’s economy.
Zimbabwe President Robert Mugabe asked the international community for financial support to help restore the country’s ailing economy. The new unity government introduced the Short Term Emergency Recovery Pan (STERP) that is supposed to increase factory utilization to levels above 60%. During the past year most industries scaled down production or closed, dropping capacity utilization to about 4%. Mugabe also focused on getting sanctions that targeted him and his associates lifted by the United States and European Union. He blamed the sanctions, but his critics blame him for the faltering economy. Meanwhile, Ulla Tornanes, the Danish Minister of Cooperation Development visited Zimbabwe to talk about working together, but she insisted Zimbabwe must first restore law and order to the country and stop the crime wave of farm invasion. Zimbabwe officials promised to look at farms protected under bilateral agreements and compensate people for the invaded land. They also promised to resolve outstanding political issues such as continued detention of political activists.
The International Monetary Fund (IMF) refuses to provide financial assistance to Zimbabwe until they establish a track record of sound policy implementation, donor support, and resolve all overdue debts to official creditors, including the IMF. However, the IMF did say they would assist Zimbabwe through policy advice. Zimbabwe hoped a good report from IMF would establish trust in the country and encourage support from international donors. Just last month Prime Minister Morgan Tsvangirai said the country needs about $5 billion dollars to restart the economy, of which $2 billion is needed immediately. President Mugabe continued to ask for the removal of sanctions set up by the US and European Union. The sanctions were established because of Mugabe’s reallocation of farm lands from white commercial owners. Critics blame this policy for food shortages and economic collapse because it gives inexperienced farmers land just for supporting the Zanu-PF. Zimbabwe has the highest inflation rate in the world although it has leveled off since the termination of the Zimbabwe dollar. Zimbabwe also faces a 94% unemployment rate and more than half the population faces starvation.
If Zimbabwe does not establish some sort of financial reform soon the citizens of this once great country may face a starvation epidemic similar to the 1985 Ethiopian epidemic. The internal infrastructure the country is falling apart and social programs have been hit the hardest. The unity government must start to listen to the international community and I believe they must follow any rules set out by them, particularly when it comes to farm reallocation, in order to get their support. Now is not the time to try to save face and stand by policies that have destroyed the country. Zimbabwe must change with the times and in accordance to the IMF, US, and European Union. The people of the country have to be saved, but in order for that to happen the leaders, particularly President Mugabe, must listen to international advice.
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