Zim’s blueprint for recovery

Zimbabwe has unveiled an ambitious US$5-billion short-term economic recovery plan, which President Robert Mugabe was expected to announce on Thursday, laying out for the first time the coalition’s plan to reverse years of economic turmoil under his rule.

To an audience of foreign diplomats, global financiers and members of the coalition government, Mugabe was to present a 121-page document that acknowledges that the unity government faces ”the challenges of collapse and decay”.

The plan announces a new push to win over sceptical international donors, attract critical skills, embark on a fire sale of ”non-strategic” state enterprises, revive agriculture and lift depressed industrial output.

The success of the plan will depend almost entirely on Zimbabwe’s ability to ”secure external international financial support as part of the measures coordinated by the Southern African Development Community [SADC] to support economic recovery in Zimbabwe”.

The blueprint stops just short of adopting the rand as Zimbabwe’s official currency, only making it ”the currency of reference” for use in setting benchmarks for the plan.

”Government has decided that the reference currency should be the rand. The reasons for this are partly determined by economic factors as well as the future intention of SADC to adopt a common currency, which inevitably will have to be based on the rand given the dominance of the South African economy in SADC,” the report says.

An assessment of Zimbabwe’s needs in key sectors such as agriculture, water and sanitation, education, health, industry and local government put the ”total resource requirements in excess of US$5 billion”, the new plan says.

The plan is refreshingly frank on the depth of Zimbabwe’s economic crisis, a marked departure from years of denial under the Mugabe government.

”The rehabilitation of these and other sectors will take many years beyond the emergency programme,” it said.

But it appears short on detail and admits it faces little chance of success without foreign aid. On Wednesday Finance Minister Tendai Biti lowered revenue forecasts by 43%, telling Parliament to ”face the grim reality” of weak revenues.

The reform plan places agriculture at the centre of the recovery effort, backing Prime Minister Morgan Tsvangirai’s demands for a halt to fresh farm invasions and a land audit.

”To promote confidence, investments and other developments on farms, as well as ensuring security of farming operations, the inclusive government will uphold the rule of law as well as enforce law and order on farms including arresting any further farm invasions which disrupt farming activities.”

The plan also places emphasis on attracting skills back home. It targets doctors, engineers, university lecturers, science teachers and financial and information technology experts.

But there is no detail given on what these incentives entail or whether donors are backing the programme.

On the economic fundamentals, a reform plan would ”allow the new foreign currency-based CPI inflation to moderate to low levels such as under 10% per annum by the end of 2009”.

The rand would be used to measure progress, but would not become Zimbabwe’s official currency.

”It is important to reiterate that nominating the rand as the reference currency in no way diminishes government’s commitment to multiple currencies. It is, however, the first step in anticipating an epoch when we can resume use of the Zimbabwe dollar, but it will be necessary first to restore the multi-currency economy to a reasonable and sustainable level of activity.”

State enterprises will either be recapitalised or sold. Negotiations with interested private consortiums have already begun.

The new government is aware of the scepticism likely to meet this new plan. The document admits that the ”experience from previous policy pronouncements have demonstrated [a] serious deficiency in the implementation of agreed policy measures”.

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Jason Moyo
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