On their first official visit to Zimbabwe in years last week, three major global lenders found the country’s once bitter foes working closely together. The funeral of Prime Minister Morgan Tsvangirai’s wife Susan genuinely seems to have united him on a personal level with long-time nemesis President Robert Mugabe.
But the International Monetary Fund (IMF), the World Bank and the African Development Bank (AfDB) were cutting through all the emotion and set tough demands that a senior economic minister admitted cannot be met.
The institutions, which sent a delegation to Zimbabwe for the first time since 2006, want Zimbabwe to pay old debts before it receives any new aid and also demand major cuts in social spending at a time when the country is desperate to ease a massive humanitarian crisis.
Elton Mangoma, minister for economic planning, said Zimbabwe is not in any position to pay off its debts.
State media has been upbeat on the visit, raising hopes of financial aid. But IMF Africa director Antoinette Sayeh said the country must first clear outstanding arrears before getting new support.
The new government needs foreign aid to survive, but a combination of international scepticism about the coalition government and the global financial crisis may keep Zimbabwe from accessing support.
In meetings with government and central bank officials the delegation made repeated demands for Zimbabwe to honour its debts.
Zimbabwe owed US$89-million to the IMF at the end of February, US$600-million to the World Bank and US$429-million to the AfDB, whose head, Donald Kaberuka, said that Zimbabwe must settle its existing debt before it can expect new aid.
A senior Zimbabwe treasury official told the Mail & Guardian last week: ”If we were in any position to repay our debts, we wouldn’t need to ask for aid, would we?”
Mangoma admitted that Zimbabwe faces tough conditions from the IMF and the World Bank. ”The funding will be a result of two things — the credibility of our plan and our ability to deliver on set policies and how the institutions think we will be able to do what we are saying we will do.”
The IMF has shown unease with the fact that the bulk of state spending, much of it funded by donor money, is going into salaries for civil servants. Whereas poor pay has whittled down the size of the civil service, the IMF wants to see even further ”rationalisation” of the government payroll, one business leader said.
The financial institutions also want cuts on overall social spending. But in the unity government Tsvangirai has control of most of the social ministries and is desperate to bring visible relief. With elections within 24 months, the MDC hopes to use its position to win the loyalty of the civil service, police and the army.
Officials close to the mission note that the institutions are critical of the new government’s spending. Both parties appointed more ministers than allowed by the Constitution, and each of the 71 Cabinet members has been awarded an SUV and a full complement of aides.