Tuesday, March 31, 2009

Government has now released its first official inflation tables

Government has now released its first official inflation tables since July 2008. I have attached the Consumer Price Increase figures for January and February this year, which show that the Central Statistical Office has chosen to re-base all the figures to December 2008. So all the December figures show 100 as the index and the January and February figures in the attached table show the extent of the US dollar price movements since December.

You will note immediately that most of the prices have fallen since December, indicating an increasing amount of competition between retailers as well as improving efficiency in the procurement of the imported lines that make up most of the retailers' stocks. Now that the 5% surrender of daily turnover has been abolished, which confiscation of funds also applied to wholesalers and manufacturers, the prices should fall further. Many basic food products are now duty free, but the duties ranging between 40% and 60% that applied to most other goods have now been set at a flat 40%, but the additional charges affecting clothing and footwear must be added. For clothing, this has been reduced from US$10 per kg to US$5 per kg, but the additional charge for shoes remains the same at US$5 per pair.

New calculations have been done by the CSO to reintroduce their Poverty Datum Line tables. So far, figures are available only for January. Separate exercises have been done to distinguish between food and other requirements, the food calculations being done on the basis if an intake of 2100 kilo-calories per person. In January, the costs of the required quantities was calculated at a national average of US$35,47 per person per month. Further details show that the prices were lowest for Harare consumers, at US$31,61, and highest at US$40,43 for those in Matabeleland North.

Expenditures per person for the full range of requirements measured, including food, was an average of US110,42. No breakdown of the items in the average consumption spending basket is offered. The tables also show these expenditures for a family of five people, but to arrive at these figures, the CSO has simply multiplied the amounts per person by five. This makes the unrealistic assumption that a family of five will occupy five rooms, use five times as much energy to cook food and all members would need to spend the same amounts on things like clothing and bus fares. The stated requirement of US$552 per family of five seems likely to be well above the average actually being paid, but it seems unlikely that we will receive any detailed guidance on employment numbers and average actual earnings for some time. Statistics of this nature were last published in 2004.

John Robertson

Biti confident of IMF support

March 30, 2009
MBABANE, Swaziland (AFP) - Zimbabwe Finance Minister Tendai Biti said Monday he remained confident the International Monetary Fund would assist his country, despite the lender’s concerns raised during a mission to Harare.
The IMF last week set conditions for any new lending, including the government’s ability to rally donor support and settle more than 125 million dollars in arrears.
Biti told reporters on the sidelines of a regional summit in Swaziland, where leaders are considering aid to Zimbabwe, that he believed the global lender would eventually set the stage for new assistance.
“I am absolutely positive that they will write a report that says look, Zimbabwe is bankable, there is a new brand that is being created here,” Biti said.
“They express great pleasure with our macroeconomic framework,” he said.
The erstwhile opposition leader Morgan Tsvangirai last month formed a unity government with long-time ruler President Robert Mugabe.
The new cabinet has unveiled an economic recovery plan that slashed price controls, eased import restrictions and made the South African rand the currency of reference — after the local Zimbabwe dollar collapsed in value, leaving it worthless.
The summit of the Southern African Development Community (SADC) was meeting to consider how to help Zimbabwe’s reconstruction, which the government says will require US$8.5 billion over the next three years.
So far, regional leaders have made few concrete promises of aid, aside from pledging to help Zimbabwe win donor support.
“We are less concerned with the quantitative amounts that have been pledged than with the principle” that SADC was accepting responsibility for the power-sharing deal brokered by the bloc, Biti said.
Opening the summit, Swazi King Mswati III urged western countries to end their sanctions on Zimbabwe, which Biti said he believed key donors like the United States and Britain would do.
“They will join the party, not because we are asking them to, but because what we are doing on the ground is a reflection that this an irreversible process to change, this is an irreversible process to democratisation,” he said.

Mangoma appeals for S African investment

Mangoma appeals for S African investment
March 30, 2009
Elton Mangoma, Economic Planning Minister
By Mxolisi Ncube
JOHANNESBURG – Zimbabwe’s Minister of Economic Planning and Investment Promotion, Elton Mangoma, says that Zimbabwe’s government of national unity will formulate policies that will ensure a socio-political environment that is conducive for economic growth, as it bids to revive the country’s battered political and economic image.
Mangoma, who made a presentation at KPMG South Africa, in Johannesburg Monday, said that the new government would revisit the land reform, which has been blamed for the country’s economic downturn, and the quasi-fiscal operations of the Reserve Bank of Zimbabwe, which he said were responsible for causing hyper-inflation.
“There will be no money printing which has been the major source of money supply growth resulting in high inflation levels,” said Mangoma.
“The Reserve Bank of Zimbabwe will desist from funding quasi-fiscal operations and hence will now concentrate on its major mandate of ensuring the stability of prices and the financial sector.”
Mangoma, who is from Prime Minister Morgan Tsvangirai’s mainstream Movement for Democratic Change, added that the all-inclusive government would institute a land audit in an bid to restore the country’s agricultural sector, which was destroyed by Mugabe’s land reform program of 2000.
“….the issue of farm invasions is also under consideration to ensure that this is stopped forthwith as it sends wrong signals to investors,” said Mangoma.
“The issue of security of tenure will also be pursued to enable farmers to freely make investments on their farms. Zimbabwe will be a law abiding country and will respect property rights as well as the rule of law.”
The Minister also promised that Zimbabwe’s inclusive government would embark on the drafting of a new “people-driven Constitution as a matter of urgency”, while also restoring media freedom.
“The Inclusive Government will liberalise the air waves, free the media, and ensure that plural voices are heard through both electronic and print media.
“…undertaking legislative reforms intended to strengthen good governance, accountability and promoting the rule of law as well as equality and fairness, including gender equality.”
He added that Zimbabwe was also working on strengthening relations and diplomatic ties with the international community, in a bid to garner international support.
“We are now re-engaging the international community to mobilise support for the resuscitation of social services, utilities, and infrastructure,” he said.
“A multi-pronged approach to engage the international community is focusing on restoration on normal diplomatic relations, unlocking critically needed balance of payments financing, foreign debt rescheduling and renegotiation as well as clearance of outstanding external payment arrears.”
Mangoma appealed to South African companies to boost his country’s economic recovery efforts by recapitalising their Zimbabwean subsidiaries, and opening lines of credit to Zimbabwean companies.
“The South African private sector can play a significant role in the economic recovery through recapitalisation of South African companies in Zimbabwe which are currently operating at low capacity levels. These companies need injection of resources to enable them to increase their production,” he said.
“South Africa can also benefit through advancing lines of credit to Zimbabwean companies which are operating at low capacity levels.
“South Africa will tend to benefit both as companies as well as a country if credit lines are extended to Zimbabwe.
“These benefits include optimal capacity utilization by South African companies, preservation of jobs and consequently keeping the current global recession out of South Africa as well as re-establishing the Zimbabwe market which dwindled.
“The total requirements by Zimbabwean companies are in excess of US$1 billion, for an initial ten-month period, to facilitate the same to raise capacity utilisation from 10 percent to about 60 percent. Therefore, we are requesting the South African private sector to support these companies with lines of credit.”
He said that Zimbabwe would be able to repay these loans with proceeds from exports of cotton, tobacco, horticulture, gold, platinum, remittances and receipts from tourism.
“Zimbabwe is also making concerted efforts to attract foreign direct investment and it is anticipated that such efforts will bear fruit and hence generate foreign currency that will also assist in repayment of these lines of credit.”
Mangoma said that Zimbabwe’s recovery would bring significant benefits to the South African economy, through increased employment, export earnings as well as remittances from profits earned by Zimbabwean subsidiaries of South African companies.
“Therefore, the assistance advanced to Zimbabwe by the South Africans will result in a win-win situation for both countries.”

Monday, March 30, 2009

US immigrants cut costs to keep up remittances

Sun Mar 29, 2009 12:21pm GMT*
Immigrants in US tighten belts to keep up remittances*
Many still feel obligation to help families overseas*
Reduced payments a threat to developmentBy Rebekah Kebede
NEW YORK, March 29 (Reuters) -
The meager pay Tembeni Fazo earns from occasional housekeeping work was never enough to support one household, let alone two, but now the U.S. recession is forcing the African immigrant to make more sacrifices."If I don't send money to my family, nobody will," said Fazo, 30, who financially supports her mother, brother and son in Zimbabwe, none of whom have jobs in a country where unemployment is around 90 percent.The burden of supporting family members abroad is weighing more heavily on immigrants in the United States, and many, like Fazo, are having to cut costs to keep up the remittances."Migrants are trying to stay on as long as possible and skipping meals or sharing accommodation with others to save money to send remittances," said Dilip Ratha, lead economist with the World Bank. "A lot more hardship for them, but then every dollar saved here can mean a meal for many back home."But remittances are dropping despite the sacrifices.The global rate of growth for such payments to developing countries slowed in 2008 after hitting double digits in 2007 and was expected to fall between 5 and 8 percent this year, according to the World Bank's recent projections.Francisco Lopez moved into a shared apartment with three other migrant workers to save money after he was laid off from his job at a power company eight months ago in Phoenix, Arizona.Lopez, 43, has tried to find work as a day laborer but is barely able to scrape together $350 to send to his family in Mexico, a far cry from the $800 a month he would send during better times.Jobs are particularly hard to find in construction, an industry hard hit by the recession and one with a high proportion of migrant workers. According to the Inter-American Development Bank (IDB), 17 percent of Latin American immigrants work in the industry.SENDING SAVINGSFor most immigrants in the United States, remittances are an obligation in good or bad times."It's not an option not to send money," said Fatou Diop, a Senegalese immigrant who works as a community liaison at African Services Committee, a non-profit group in Harlem, New York. "When it's hard here, it's horrible in Africa."Some immigrants appear to be dipping into their savings to keep the financial pipeline home going.Cash savings among Latin American immigrants, for instance, dropped from $3,500 in 2007 to $2,500 in 2008, according to the Inter-American Dialogue, a Washington-based policy center."That's why you haven't seen as big of a drop in remittances in the past two quarters as you would have predicted given the unemployment," said Francis Calpotura, the executive director of the Transnational Institute for Grassroots Research and Action, another non-profit group.Audrene Rowe moved to Brooklyn, New York, from her native Jamaica three months ago in hopes of finding a job. But she has had not luck despite possessing a master's degree in human resources and health services.Rowe, 31, is using her savings to support herself and her 4-year-old daughter, who is staying with relatives in Jamaica.Discontinued remittances can have dire consequences, including less spent on education and healthcare and other expenses that contribute to development and enhance quality of life."When there is a crisis like there is now, people spend more money on the daily necessities," said Robert Meins, a remittances expert at the IDB.Jose Pineda, 36, is among those who have been unable to keep up payments since losing his job as a landscaper -- he used to send $200 a month to his wife and four teenage children in El Salvador."They have sold the car and they are now thinking of selling the house," Pineda said. (Additional reporting by Tim Gaynor in Phoenix; Editing by Paul Simao)

Multiple currencies spell doom to Zimbabwe itinerant traders

by Pindai Dube
29.03.2009 9:29:25
The decision to officially adopt multiple currencies for transacting business following a spectacular collapse of the local Zimbabwean currency has spelt the death of cross border traders and informal money-changers that cluttered the city's pavements.Cross border traders and informal money changers were evident with their flashy lifestyles, and used to live like diplomats, moving with loads of new script Zimbabwe dollars and foreign currency. They used to drive the latest fast flashy cars and frequented expensive food outlets and hotels for breakfast and lunch.Denis Nyoni (30), a former cross border trader, now sits expectantly among a row of other men and women at the edge of a pavement arranging packets of biscuits into a stack and sweets imported from South Africa in clutches on plastic sheeting spread on the ground.Occasionally the women and men out shout one another to advertise their wares to passers-by."Only five rand (R5 or US$0, 50 cents) for the biscuits and one rand for ten sweets," they chorus in contrast to the discreet approach they were accustomed to, to evade the police while dealing in exchanging hard currency.In late January this year, the Reserve Bank of Zimbabwe (RBZ) lost the battle of trying to stem dollarisation of the economy and let all companies and individuals conduct transactions in foreign currencies following the collapse of the local currency.Until then, only authorized businesses were allowed to do so. That decision dealt a heavy blow to informal money changers and cross border traders.Business was booming for cross border traders when Zimbabwe shops and supermarkets were empty. They used to cross to Botswana to import various basic commodities and household goods for resell to desperate Zimbabweans at flee markets at three or four times their cost.Business also boomed for the illicit trader while the central bank tried to fight pesky currency shortages by printing money, accelerating the devaluation of the local currency in relation to other hard currencies.Informal money changers often offered higher exchange rates than commercial banks, driving holders of hard currency to beat a path to the illegal currency dealers and money exchangers operating on street corners.But the decision has precipitated hard times for the cross border traders and informal money-changers that used to thrive on the back of a volatile local currency due to hyper-inflation. The daily erosion in value of the Zimbabwean dollar drove most people to seek better store of value in foreign currencies."I will be lucky to sell ten of these a day," Nyoni, a father of four says, reluctantly pointing at packets of biscuits stacked near his feet and adding: "Even if I do, it is hardly enough to get me and my children going for a week."At the peak of his business, Nyoni used to rake thousands of pulas every week selling basic goods and household property to Zimbabweans at a high cost since the shops and supermarkets were bare.He had managed to also buy two cars, a BMW X5 vehicle and an Audi that he has been forced to sell as he has been pushed out of business by the shops and supermarkets that are now allowed to charge for their goods and services in foreign currency, at a low price compared to cross border traders.Nyoni says it has become an uphill struggle to make ends meet these days compared to the past when she could comfortably fend for himself and his son and daughter from the income he generated from commission as an informal money-changer."As you can see for yourself the competition for customers is stiff, with all these shops and supermarkets selling the same products at half price," Nyoni told the Sunday Standard.Like his many colleagues these days, Nyoni says he is now struggling to survive and can barely pay for his lodgings as they have been turned to near beggars following their sudden change of fortunes.According to investigations, most of the cross border traders who had easy access to foreign currency, have now resorted to selling their property and cars to make ends meet.At the same time, most of them have moved away from flats and low density areas where they had flocked when they had easy access to loads of Zimbabwe dollars.They are now heading to high density areas where there is relatively cheap accommodation and are said to be withdrawing their children from expensive private schools and taking them to government schools following their change of fortunes since they now have no access to loads of cash like they used to before the dollarisation of the economy.During their heydays, cross border traders and informal money-changers lined up the same pavements clutching handbags bulging with wads of local currency to exchange for hard currency.Most operated as agents for well-heeled cash barons in return for a commission while others, acting on their own, raked in thousands of dollars daily which enabled them to maintain comfortable lifestyles."My sister could not withstand her changed circumstances, gave up and returned home," says Gladys Ncube (39). Both had drifted from rural Gokwe to the city to join the growing numbers of money changers.Together, they had shared the rent for lodgings in Njube working class suburb of the city. "It was worthwhile staying but if the situation persists as it is, I might follow her decision," Ncube says.Hard times have befallen money changers and Ncube says she finds it tough to raise the rent from her new line of business. Some of her former money changers are drifting back to the rural areas after discovering that the going is getting tougher for the informal trader.Last month, she pawned her bedside radio in order to raise the rent and pay her share of municipal service charges with other tenants.Ncube fears she might be forced to sell off other assets she had acquired during her two year stint as an informal money changer to make ends meet.And the absence of money-changers particularly along Fort Street has brought mixed reactions from affected businesses on the same street.A fast-food restaurant manager, Desmond Moyo, says he had experienced a notable slump in business when cross border traders and money-changers deserted the pavements."They would linger along the pavement and bring in their clients to negotiate exchange rates over a snack or a packet of chips away from the probing eyes of the police," says Moyo. "Now they are gone along with the customers they brought in."

Sunday, March 29, 2009

New Dawn Reports Further Positive Policy Changes in Zimbabwe

TORONTO, Mar 27, 2009 (Canada NewsWire via COMTEX) ----New Dawn Mining Corp. (TSX: ND: undefined, undefined, undefined%) is providing an update to report further positive economic policy changes in Zimbabwe as outlined in the Short Term Emergency Recovery Program ("STERP") recently presented by the new Minister of Finance. The new STERP is expected to have a direct positive impact on the Company's Turk Mine, as well as positive effects for the Zimbabwe economy as a whole.
Specific to New Dawn and the Zimbabwe mining industry, the new STERP eliminates any retention on revenue derived from export sales. In the January 2009 Monetary Policy Statement, retention was reduced to 7.5% from 15%. Now, under the new program, it has been eliminated completely. The result is to allow gold producers to continue to market their gold directly and to now retain 100% of the proceeds from such gold sales in foreign currency. At the same time, the STERP proposes to review taxation and royalty structures to bring them in line with international standards.
The STERP also confirms that the new liberalized exchange controls will remain, which will result in New Dawn receiving payment for its gold sales in US dollars, thus eliminating any currency risk.
Additionally, the STERP maintains the previous threshold that any business transaction under US$5M, including the sale of gold, does not need Reserve Bank of Zimbabwe approval. For New Dawn, this permits flexibility for future gold sales and further demonstrates the extent of the positive changes that are now occurring with respect to Zimbabwe's economic policies.
The STERP also includes expediting amendments to the Mines and Minerals Act, particularly in respect to the framework for mining rights, with a view toward reviewing the mining title system, discouraging hoarding of claims which are not being worked, and reforming the Mining Affairs Board.
"Positive changes in economic policy in Zimbabwe are occurring. The new STERP provides us even further confidence and evidence of the positive steps forward being taken by the government towards ensuring economic stability," said Company President and CEO Ian R. Saunders. "For New Dawn, the STERP provides us greater visibility as we move closer to resuming full-scale gold mining operations and begin to generate free cash flow in US dollars, from our export sales of gold mined at our Zimbabwe operations."
New Dawn anticipates moving into full-scale mining operations at the Turk Mine in Zimbabwe during the second calendar quarter of 2009, and expects to report to shareholders in this regard in the near future.
About New Dawn ...
New Dawn Mining Corp. is a junior gold company concentrating its efforts in southern Africa. The Company is well established there with three mines, two production facilities, a skilled and experienced workforce and significant resources.
Two recent NI 43-101 reports documented an aggregate of 969,546 ounces of gold reserves and resources grading between 2.9-6.1 g/t, with additional inferred mineral resources of 355,873 ounces of gold grading between 3.90 - 5.91 g/t. Reserves and Resources are based upon a 2.45 g/t cut-off and US$875/oz gold price at the Turk and Angelus Mines and a 2.0 g/t cut-off at US$750/oz gold price at the Company's Blue Dot Property. For further information on the Company's gold reserves and resources, visit the Company's website at www.newdawnmining.com or filed on SEDAR at www.sedar.com .
New Dawn wholly owns the Turk and Angelus Mines in the upper southwest area of Zimbabwe, with a production facility currently capable of processing up to 400 tonnes per day or 12,000 tonnes per month; and owns a 74% interest in the Blue Dot Property in South Africa, with a production facility there rated at 180 tonnes per day or 5,500 tonnes per month. The Company maintains a highly experienced work force of over 800 people.
The Company has additional assets that form a portfolio of exploration properties, and include the Consolidated Bubi Gold Fields, consolidated Midlands Gold Fields and consolidated Shurugwi Gold Fields properties, all of which are located in Zimbabwe.
The TSX has not reviewed and does not accept responsibility for the adequacy or the accuracy of this release. Statements in this press release regarding the Company's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties, such as estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements.
The contents of this news release were supervised and reviewed by Ian R. Saunders, B.Sc., who is President, Chief Executive Officer, and a Director of New Dawn Mining Corp., and who is a Qualified Person within the meaning of NI 43-101.
Investors are invited to visit the New Dawn Mining Corp. IR Hub at AGORACOM: http://www.agoracom.com/ir/NewDawn where they can post questions and receive answers or review questions and answers already posted by other investors. Alternatively, investors are able to e-mail all questions and correspondence to: ND@agoracom.com where they can also request to be added to the investor e-mail list to receive all future press releases and updates in real time.
Special Note Regarding Forward-Looking Statements: Certain statements included or incorporated by reference in this news release, including information as to the future financial or operating performance of the Company, its subsidiaries and its projects, constitute forward-looking statements. The words "believe," "expect," "anticipate," "contemplate," "target," "plan," "intends," "continue," "budget," "estimate," "may," "schedule" and similar expressions identify forward-looking statements. Forward-looking statements include, among other things, statements regarding targets, estimates and assumptions in respect of gold production and prices, operating costs, results and capital expenditures, mineral reserves and mineral resources and anticipated grades and recovery rates. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Company, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Company. Such factors include, among others, risks relating to reserve and resource estimates, gold prices, exploration, development and operating risks, political and foreign risk, uninsurable risks, competition, limited mining operations, production risks, environmental regulation and liability, government regulation, currency fluctuations, recent losses and write-downs and dependence on key employees. See "Risk Factors" in the Company's May 29, 2008 Prospectus. Due to risks and uncertainties, including the risks and uncertainties identified above, actual events may differ materially from current expectations. Investors are cautioned that forward-looking statements are not guarantees of future performance and, accordingly, investors are cautioned not to put undue reliance on forward-looking statements due to the inherent uncertainty therein. Forward-looking statements are made as of the date of this Management Discussion and Analysis and the Company disclaims any intent or obligation to update publicly such forward-looking statements, whether as a result of new information, future events or results or otherwise.
%SEDAR: 00026497E
SOURCE: New Dawn Mining Corp.

Friday, March 27, 2009

Zimra officers fleece new firms

Friday, March 27, 2009
Bulawayo BureauIN what could turn out to be a big scandal, Zimbabwe Revenue Authority officers in Bulawayo are demanding R500 to issue tax clearance certificates to new companies, despite the fact that the service is for free.The officers have gone as far as giving clients an account number into which they should deposit the money.The officers, operating from the third floor of Mhlahlandlela Government Complex, are asking for R500, P500 or US$50 to process the certificates.Investigations by our Bulawayo Bureau this week revealed that the officers give clients a tax number without the certificate and only release the document when the money has been paid.Zimbabwean law bars a company from trading formally without a tax certificate. Not having one effectively stops an organisation from transacting with big companies or legally supplying bulk orders.A number of people called the Bulawayo Bureau on Tuesday when they discovered they had been fleeced."A Mrs Ncube attended to me and when she said I should pay, I thought it was part of the procedure. After paying, I got shocked when a friend told me there was no charge for getting a certificate," said a man, who asked not to be named.Another man who also asked not to be named said a Mr Mudzingwa at Mhlahlandlela gave him a CBZ account number when he said he did not have money on him to pay."Mr Mudzingwa gave me Account Number 01222381360032 at CBZ and said the account name was Commissioner General."He gave me my tax number but said the certificate could only be released when the full amount had been paid. I am yet to pay so I do not have a certificate, which means I cannot start trading legally," said the man.He said he suspected scores more could have fallen prey to the corrupt officials at Zimra .Posing as a businessman, our Bulawayo Bureau called Client Services at Zimra Mhlahlandlela pretending to be a customer who had forgotten the number and was promptly given the same CBZ account number at the reception, giving rise to speculation that many people were involved in the scam.At the Zimra main offices, at the corner of 8th Avenue and Fort Street, our bureau was emphatically told that tax clearance certificates were issued for free."There is no charge for getting a tax certificate. Unless the law changed within the last few hours and we have not yet been informed about the change, it is free," said a woman at the reception.In a telephone interview from Harare, the Zimra chief loss control officer Mr Peter Paradza said they would institute investigations into the matter."We do not charge anything to issue tax clearances. If anyone has been doing that, we welcome any details so that we can conduct our investigations and bring the culprits to book," he said.

Stock Exchange resumes trade

March 26, 2009By Our CorrespondentHARARE - The Zimbabwe Stock Exchange resumed trade today with only one counter trading.Only Apex Corporation traded after all the other counters' offers found no takers as the equities market in now trading in US dollars.Interfin, the only active counter, bought 3 026 Apex shares at 1 US cent during the trade.More than half of the 78 listed counters were offering prices between 1 cent and 5 cents. The prices were however all less that 0, 70 cents when trade stopped on November 20 last year.ZSE chief executive Emmanuel Munyukwi said he was happy that trade had resumed and that some outstanding issues would be addressed while trade was active."It is a positive move. There are still some outstanding issues which we hope will be addressed as shares change hands," said Munyukwi.Trading was brought to a halt on the ZSE on November 20 after Reserve Bank of Zimbabwe governor Gideon Gono discovered that banks were using fraudulent cheques to artificially inflate share prices.As trade resumed yesterday a brokerage fee of 2 percent was agreed for purchases, as the Ministry of Finance said it wanted to boost tax, although brokers wanted 1 percent.Stamp duty was agreed at 0, 5 percent while Value added Tax would be 15 percent of brokerage fee.Fungibility was restored for all dual listed counters and a letter to that effect was on its way to the Reserve Bank.Trade on the bourse is now supposed to be backed by a letter of confirmation from a bank chief executive officer.The Zimbabwe stock market had over the past two years been the preferred investment vehicle as it offered returns which were above inflation.While the country's economy was crumbling, the Zimbabwean share speculator was earning returns above inflation, keeping up much better than ordinary citizens on the street.Most shares were gaining by over 50 000 percent in one day. This jump in share prices was in excess of increases in consumer prices which averaged 10 000 daily during the same period.Events that stimulates Gross Domestic Product (GDP) - a country's wealth, will growth inevitably drives stock prices up, and any event that hurts GDP growth pulls stocks prices down.The opposite was, however, happening in Zimbabwe, share prices were rising while the economy continued to collapse.Economic analysts said excess growth in money supply was giving a wrong impression to investors who used the Stock Exchange as a barometer for Zimbabwe's economic performance.The country has been suffering from catastrophic economic and political policies, largely blamed President Robert Mugabe's government. The only means for government to fund itself has been to print bank notes.The stock market had become a prime beneficiary of any monetary expansion. Fresh money enters the economy first through banks and other financial entities that may invest it in shares, or lend it to others who buy shares.Thus stock prices rise above prices of food and other investment vehicles and will outperform them as long as this monetary process is allowed to continue.

Thursday, March 26, 2009

Africa jumps on Zimbabwe restart

Shares in Mwana Africa Plc jump 10.4 percent after the miner says it
plans to restart gold production at its Freda Rebecca mine in Zimbabwe.
Mwana says the restart of mine is made possible by higher gold prices and
after the new coalition government allowed gold producers sell gold on the open
market and to hold foreign currency.
'There remains considerable political risk for mines in Zimbabwe which have
largely closed down due to the current difficult political environment,' Fairfax
says in a note.
'However, the new procedures laid out by RBZ (central bank), the recent
political progress and the official acceptance of rand and US dollar as
acceptable currencies within the country gives hope that the resources industry
within the country can begin to recover.'
To see Mwana Africa's statement please click on
Reuters messaging rm://eric.onstad.reuters.com@reuters.net

Wednesday, March 25, 2009

Monthly inflation down to -2.3 percent

March 24, 2009
HARARE (Reuters) - Zimbabwe recorded a monthly inflation rate of -3.1 percent in February and -2.3 percent in January after the government revalued its currency and allowed the use of foreign currencies, official figures showed on Tuesday.
The Central Statistical Office (CSO) did not release a yearly figure.
The country is grappling with a severe economic crisis and has allowed the use of foreign currencies to tame hyper-inflation.
The latest official data released in October showed inflation soared to an all-time high of 231 million percent year-on-year in July from 11.2 million percent the previous month.
Finance Minister Tendai Biti last week projected inflation would fall to just 10 percent by the end of this year as the use of foreign currency helps to stabilise prices.
Zimbabwe’s unity government between President Robert Mugabe’s party and the MDC of Prime Minister Morgan Tsvangirai has launched an economic recovery programme that envisages political reforms aimed at winning back stalled Western donor aid.

Monthly inflation down to -2.3 percent

March 24, 2009
HARARE (Reuters) - Zimbabwe recorded a monthly inflation rate of -3.1 percent in February and -2.3 percent in January after the government revalued its currency and allowed the use of foreign currencies, official figures showed on Tuesday.
The Central Statistical Office (CSO) did not release a yearly figure.
The country is grappling with a severe economic crisis and has allowed the use of foreign currencies to tame hyper-inflation.
The latest official data released in October showed inflation soared to an all-time high of 231 million percent year-on-year in July from 11.2 million percent the previous month.
Finance Minister Tendai Biti last week projected inflation would fall to just 10 percent by the end of this year as the use of foreign currency helps to stabilise prices.
Zimbabwe’s unity government between President Robert Mugabe’s party and the MDC of Prime Minister Morgan Tsvangirai has launched an economic recovery programme that envisages political reforms aimed at winning back stalled Western donor aid.

Tuesday, March 24, 2009

Zimbabwe’s Revised 2009 Budget

Zimbabwe’s Revised 2009 Budget
and the Short-Term Emergency Recovery Programme
The new Minister of Finance has responded quickly to the weaknesses of the first attempt at preparing a budget for 2009 by launching in the budget debate in Parliament a more cautious replacement.
In this, the Minister scales down to US$1 billion the spending proposals, matching this to the more modest sum that he believes government can expect in tax receipts, and he makes no assumptions that aid will be bound to make the budgeting easier. He does acknowledge taking guidance from the country’s performance in the first quarter of 2009, during which revenues were not even sufficient to cover public sector salaries for those months.
Low collections from VAT, PAYE and customs duties are blamed, but no reference is made to the continuing violations of human rights that have dismayed the donor community and caused most of those in a position to help to hold back their support.
In the original budget, the lowest ministry vote was for US$2,6 million, but in the revised version five of them are to receive sums less than US$2 million. The sums to be voted for each ministry have mostly been reduced by appreciable amounts, but this is partly because the number of ministries has been increased from 25 to 32.
The votes, for Education, Health, Home Affairs (Police) and Defence now come to US$520 million, or 56,5% of the total Vote Appropriations, and in the earlier version these came to US$828,1 million, but only 46,5% of the total.
In his presentation to Parliament, the Minister makes frequent references to the just-released Short-Term Emergency Recovery Programme (STERP), which was conceived after the signing of the Unity Accord in September. The 128-page document makes mention of every possible economic activity, every social dimension, every financial institution and every political aspect it claims is needed to create an economy:
a) Able to sustain itself through food self sufficiency
b) Weaned off the current price distortions
c) That creates jobs and employment opportunities
d) Confers equal opportunities and treatment to all its citizens
e) That accepts the equality and central role of women and mainstreams gender in all facets of the same
f) That takes cognisance of the environment and global environment changes
g) With functional infrastructure such as roads, water and telecommunications
h) That is people centred and inward looking
i) That guarantees freedom of expression and property rights
j) That generates confidence and inter-sectoral synergies
k) That reduces poverty
l) That is free of any sanctions and measures and is totally integrated in the region and continent.

Unfortunately, some of its suppositions are questionable. In the Preface the claim is made that the people were empowered through “the crowning consolidation of our herd-won independence”, the Land Reform Programme. As President Mugabe wrote the Preface, this claim appears to have forbidden the authors of the document from even considering the possibility that this same Land Reform Programme is the root cause of the difficulties that STERP is supposed to rectify.
Equally questionable is the claim that the removal of sanctions will “facilitate a sustainable solution to the challenges that are currently facing the country”. This claim is made even though the authors acknowledge that the sanctions have been applied against individuals accused of violating human rights, not against the country.
According to the document, “measures have been taken against Zimbabwe, denying the country the right to access credit facilities from international financial institutions…as well as denying Zimbabwean companies access to lines of credit”. However, these are not sanctions. The fact is that Zimbabwe disqualified itself from access to credit facilities and it did this by failing to meet its repayment commitments on previous loans.
The last four pages of the Budget Estimates, the Blue Book tabled in Parliament with the Budget Statements, show the details of several hundred foreign loans, the repayments on every one of which is in arrears. The total amounts outstanding add up to US$2,35 billion.
Without question, the Land Reform Programme can be blamed for the country’s inability to pay its debts. This programme broke the back of Zimbabwe’s largest industry, its commercial farming sector, and in its disabled state, this industry was of far less value to every other sector, particularly manufacturing, transport, construction and banking.
As commercial farming was the source of most of Zimbabwe’s exports, the lost export revenue had an immediate effect on the country’s ability to service its debts. But the need to import increasing quantities of food – also because of Land Reform – made foreign exchange scarcities an absolute certainty.
STERP does not address this subject. In his Foreword to the document, the new Minister of Finance, Tendai Biti, makes the important observation that “the absence of property rights has guaranteed perpetual backwardness”, but STERP makes no case of the urgent need to re-instate the property rights that were destroyed.
Neither does it suggest that Zimbabwe should re-engage the collateral value of the land to fund the recovery of this most important sector and, through this, make possible the recovery of the rest of the country. Instead, it tries to make a case for funding support that adds up to US$8,4 billion, which is more than double Zimbabwe’s Gross Domestic Product. The short-term period referred to in the STERP title in the period to December 2009.
Despite making all-too obvious cases for urgent improvements and the need to rebuild capacity in every possible area, this recovery programme seems destined to join the long list of earlier recovery plans, all of which were also eloquent descriptions of attractive destinations. Like them, this one also fails to describe the vehicle and route map needed to get there.
However, in his revised budget presentation the Minister announced some essential changes and clarified a number of important issues and it is pleasing to note that most of these demonstrate his determination to reduce governments direct involvement in business affairs.
An exception to this is his position on gold, but as Dr Gono’s earlier permission to gold miners to export their own gold was so surprising, the change is not expected to surprise anyone. As Dr Gono did not have the existing legislation repealed, it remains in place, but all miners are assured of receiving world market prices.
“In short, the pricing gap in respect of which domestic prices lagged behind international prices is a thing of the past. In the case of gold, the same will remain a strategic reserve asset whose licensing and marketing will be in line with the Gold Trade Act,” said the Minister.
With its adoption of relatively stable foreign currencies in place the now defunct Zimbabwe dollar, the question of measuring inflation now has to be dealt with differently, but one of the newer inflationary pressures has been overcome with the removal of all foreign currency surrender requirements.
As this affected the prices of inputs to the manufacturer, the prices of sales to retailers and the end prices to consumers, the cascading effect was adding a significant percentage to selling prices. The surrender of 5% of turnover also reduced profitability by an even wider margin, so its removal will assist the recovery of many producers.
However, the hopes expressed in the STERP paper that manufacturing capacity utilisation will rise from 10% to 60% between March and December 2009 seem unlikely to be achieved. The document says government will support the manufacturing sector through the establishment of external lines of credit for the importation of raw materials and equipment, but to do so, government will need to be much more aggressive about its intentions to place the country’s producers onto a more secure footing.
Zanu PF’s long-standing hostility to the business sector needs to be completely transformed by the deliberate removal of the many disincentives and handicaps placed in the way of business development. If it removes all discouraging legislation, it will be able to safely leave to the private sector the task of securing its own credit lines and investment inflows.
Government’s should immediately disabuse itself of the belief that investors will be satisfied by assurances that the Indigenisation and Empowerment Act will not be applied. Only when equity investment flows have started will the country see lenders’ confidence restored, but while this Act remains in the statute books, it will be enough to prevent any prospect of attracting the desperately needed capital.
Given the difficult conditions currently affecting capital movements all over the world, Zimbabwe faces the challenge of competing against very heavy odds and it cannot afford even the hint of a government inclination to dilute the ownership or control of an investor’s interests.
If government is successful in raising external funding, it should use this to work on the country’s physical and social infrastructure, concentrating first on electricity supplies, water, transport, health and education.
Success in these areas, together with improvements in municipal services, will greatly enhance the private sector’s chances of restoring production volumes, exports, employment growth and government’s tax revenues. Progress in all of these will depend upon restoring the skilled personnel base, but all of these will depend upon government moving aside and letting businesses get on with the job.
While important changes have come through already with the political changes this year and many of the phrases and sentiments expressed in the STERP document are pointing to the acceptance of market-related principles, much more work has to be done to expunge the still present evidence of lingering command-economy constraints.
Support for some of these appears to rest purely on satisfying the claims of small, but influential groups whose only concern is the preservation of privileges and personal protection. They are opposed to the very concepts of market-related incomes, sometimes because they are completely out of their depth in competing in such markets, but more often because they claim to have earned entitlements in recognition of their status or their past loyalty.
Whatever their concerns, their continuing involvement in the political arena appears to account for the very slow process of change that has been evident ever since the signing of the Unity Accord in September. Renewed farm invasions, abductions, arrests and many acts of violence that could have been ruled out by the same political heavyweights appear to have been deliberately caused by them to slow the progression of events.
However, they have lost their access to foreign exchange at privileged exchange rates and with the new Minister of Finance having brought an end to quasi-fiscal activities funded by the Reserve Bank, their chances of using their leverage to tap into deliveries of essential imports and agricultural machinery are rapidly disappearing.
Whichever way recent events are interpreted, the inescapable fact is that a major change has taken place and Zimbabwe’s fortunes were placed upon a new track. Although very little momentum has built up so far, politicians in opposition to Zanu PF now have authority, the Zimbabwe dollar is now dead and the Reserve Bank’s influence has been greatly reduced. These have placed power into the hands of people with distinctly different motivations.
Their challenges are immense, and long before they began to grasp the full measure of the repair work to be done they recognised the tasks to be way beyond the resources of this country. However, hopes that quick and generous assistance will come from the international donor community and development agencies have to await the further changes that will make Zimbabwe deserving of assistance.
It is on these changes that Zimbabwe must now concentrate its efforts. Regrettably, the STERP document, despite all its pleasant sentiments and agreeable phrases, will not be enough to persuade business leaders to invest in our disabled productive sectors, nor will it encourage donors and development agencies to rebuild our disabled infrastructure. They are all looking to us to make the moves needed to impress them, and every one of these moves lies in the political arena.
John Robertson

Friday, March 20, 2009

Eric Bloch: The Zimbabwe Dollar Farce

Thursday, 19 March 2009 19:29
WHEN the then acting Minister of Finance, Patrick Chinamasa, presented his 2009 Budget to parliament, on January 29, he announced that Zimbabwe would be undergoing a currency transformation whereby diverse currencies would constitute legal tender. He refrained from giving details thereof, stating that details of the new multi-currency operating modalities would be addressed in the then forthcoming Monetary Policy Statement to be delivered shortly by the Governor of the Reserve Bank of Zimbabwe (RBZ). However, he did state that government was “allowing the use of multiple foreign currencies for business transactions, alongside the Zimbabwean dollar”.
Four days later, on February 2, 2009, Gideon Gono, RBZ’s Governor, presented a Monetary Policy Statement (MPS) and, to all intents and purposes prescribed that with immediate effect all facets of the Zimbabwean economy would operate within a multi-currency environment. Although he did not use those actual words, he stated that all traders of goods, and providers of services, would forthwith be lawfully entitled to accept payments in foreign currencies. However, he expanded thereon by saying that “The Zimbabwean dollar remains the country’s legal tender as recognised by the various legal statutes, and as such shall continue to be used as a medium for exchange for all transactions in the country”.He expanded thereon, saying that “All traders shall therefore in addition to selling their goods and services in foreign currency, adopt a dual pricing framework where goods will also be quoted in local currency. This means that prices can be in rand and Zimbabwe dollars, US dollar and Zimbabwe dollars as the case may be. The dual pricing framework to be adopted… shall be legally enforceable and the pricing formulae to be implemented shall be based on the inter-bank market determined exchange rate.”However, he proceeded to prescribe some exemptions for certain parastatals and public utilities to charge exclusively in foreign currencies for certain services, instead of their being governed by the prescribed dual currency modalities. In particular, he authorised the Zimbabwe Electricity Supply Authority (Zesa) “to bill or charge their electricity tariffs in foreign currency”. However, this authorisation was qualified by prescribing that “residents in high density areas and those domiciled in the communal areas shall continue to pay electricity tariffs in local currency”. In like manner, local authorities were authorised to charge exclusively in foreign currency in respect of services to “all corporates and residents in low density areas.” Similar authorisation was granted to Hwange Colliery Company, Air Zimbabwe, TelOne and Potraz, National Railways of Zimbabwe (NRZ), Zimbabwe United Passenger Company (Zupco), rural transport and commuter operators, the print and electronic media, and in addition it was prescribed that “property transfers shall be paid in foreign currency”. Similarly, such authorisation was granted to all academic institutions, urban and private schools, producers of milk and of other agricultural products, agricultural commodity traders, and banks.In making these announcements, and granting these authorisations, Gono stated that doing so “does not amount to the dollarisation of the economy in the strict technical sense of the word”. He claimed that “All we are doing is to liberalise our trading environment by multi-currencying it”, and he contended that the currency dualisation was “a tailor-made strategic intervention that is meant to bring convenience to the general public, as well as supporting productive efficiencies whilst at the same time preserving the sovereign Zimbabwean dollars by giving it company among other currencies of choice, which is the essence of multi-currencying”.Notwithstanding the Budget Statement declared intent that usage of foreign currencies would be alongside the Zimbabwean dollar, and Gono’s statement that the Zimbabwean dollar remains legal tender which could continue to be used as a medium of exchange for all transactions, realities on the ground are very different. Virtually no one in Zimbabwe is according any cognisance to the Zimbabwe dollar (even though, in terms of Statutory Instrument 5 of 2009, it remains legal tender, as intended by both the acting Minister of Finance and RBZ’s Governor). Every factory, wholesaler, shop, hotelier, and provider of services ( be such services plumbing, electrical, health care, accounting, catering, motor repairs, hair-cutting, or a multitude of others) only displays prices in US dollars or rand, and is only prepared to accept foreign currency payments. Even government itself, in the collection of taxes by the Zimbabwe Revenue Authority (Zimra) (save for taxes on non-existent Zimbabwean dollar transactions and revenues), and in the provision of services such as the issue of passports, as well as through its parastatals, demands foreign currency payments. To all intents and purposes, the Zimbabwe dollar has become extinct!The reluctance of all to accept Zimbabwe currency is very understandable, as in an intense-record-breaking hyper-inflation environment such as has been prevailing in Zimbabwe, the currency very rapidly loses value and, within weeks (if not days) ceases to have any meaningful value. However, the non-acceptability of the currency is a cause of intense hardship and suffering for very many, and an immense constraint upon rehabilitation and recovery of the economy. In most instances, it is also in breach of law, in the light of the provisions of S.I.5. of 2009.A very large proportion of the populace do not possess, and do not receive, foreign currency. Those without rand, US dollars, Botswana pula, British pounds or euros, have therefore been rendered even more destitute from heretofore. It is all very well that government and RBZ accorded partial recognition to this circumstance by prescribing the provision of utilities in high-density and rural areas in Zimbabwe dollars, but this does not aid the Zimbabwean dollar pensioners, devoid of other income, in medium and low-density areas. For many others, their incomes are wholly or partially in Zimbabwean dollars, generally because employers have an insufficiency of foreign currency to pay employees fully (or, in many instances, even partially so), in which instances they too are unable to pay their rents, pay for utilities, and obtain essential goods and services. All of them are condemned to great discomforts and suffering, to an extent that in numerous instances is life-endangering.These circumstances are also resulting in trade union and labour demands for total remuneration in foreign currency, in total disregard for the ability or otherwise of employers to fund such remuneration. ZCTU is demanding that the minimum wage be US$454, based upon a Poverty Datum Line (PDL) for a family of six (but disregarding that such families will often have two income earners). Conceding to such demands can only result in the enforced closure of innumerable enterprises, and to a massive increase in the already horrific levels of unemployment.The Zimbabwean dollar has become a meaningless, valueless farce, and will remain so unless government significantly and constructively modifies its demands, and those of its parastatals, from the present excessively great demands for foreign currency. Concurrently, S.I.5 of 2009 must be enforced, albeit with justice and equity, thereby substantively restoring legal tender status to the Zimbabwean dollar and, at the same time, the vigorous drive to contain and reverse inflation must continue, commencing with very marked curtailment of governmental spending.

Thursday, March 19, 2009

From Riches to Rags: Inflation & Poverty in Zimbabwe

Economists have long used 1920s Germany as the classic example of what can happen to a nation when monetary inflation gets out of control. So rapid was the inflation of the money supply that the exchange rate went from 60 marks per U.S. dollar during the first half of 1921 to 8,000 marks per dollar by December 1922.
There is an old story about an elderly German man who in 1919 was sent to an insane asylum. Early in 1923, the doctors decided that this man was cured and told him to take a taxicab to the home of his brother, which he did. Arriving at his destination, he asked the cab driver how much the fare was, and the driver told him that it was two hundred thousand marks. Horrified, since he had in his possession only a few coins that had been in his pocket when he was committed, he explained that he could not possibly pay such an amount."Let me see what you do have," said the cab driver. The old man took the coins out of his pocket and held them in the open palm of his hand. The cab driver picked out one of the old silver coins for his fare, and gave his passenger a million marks as change."Son," the old man shook his head and replied, "you might as well take me back to the hospital. I'm not cured yet!"As bad as things were in Germany in the 1920s, the hyperinflation that has plagued Zimbabwe recently makes the Weimar Republic of that era look like a model of fiscal and monetary integrity.The tragedy now unfolding in Zimbabwe provides the latest example that a government cannot create prosperity simply by cranking up the printing presses and creating previously unimaginable sums of money. All that course of action ever does in the long term is destroy the value of the currency. But this tragedy is not limited to inflation of the currency, as horrific as the inflation has been. It also shows the devastating effects of share-the-wealth politics, which becomes control-the-wealth politics wherever it is put into practice.In Zimbabwe, the confiscation of private farms from the "rich," ostensibly to benefit the poor, has been devastating to the country's economy, and the government's attempt to paper over this devastation by creating ever larger sums of fiat (unbacked) money has harmed the economy even more. A few government officials have benefited from this devastation at the expense of almost all Zimbabweans.Zimbabwe's Inflation Is Even WorseZimbabwe has shattered all previous records for inflated currency, effectively bringing the nation's economy to a halt. The nation's annual inflation rate rose from 1,000 percent in 2006, to 12,000 percent in 2007, to an immeasurable figure in 2008. Last August, the government devalued the currency by chopping off 10 zeros from bills. Had they not done so, the conversion rate would have risen to 10 trillion Zimbabwean dollars to one U.S. dollar!Ironically, as nearly worthless as Zimbabwe's currency has become — the result of the tremendous inflation of its supply — it is in short supply to consumers. This is because Zimbabwe's central bank governor, Gideon Gono, instead of supplying the banks, began sending agents with suitcases filled with Zimbabwean currency into the streets to buy U.S. dollars and South African rand on the black market. "Life in Zimbabwe: Wait for Useless Money," an article in the New York Times for October 1, 2008, described residents of the financially plagued country getting up around 2 a.m. to begin their daily wait in line at the bank. Because withdrawals of currency have been rationed, each customer could receive only the equivalent in Zimbabwean currency of one or two U.S. dollars per day.The Times reporter interviewed a security guard named Stanford Mafumera, one of many Zimbabweans waiting in a bank line to obtain currency. When the reporter asked him for his opinion on the cause of his country's economic crisis, Mafumera replied that Robert Mugabe's regime had "chased away the white commercial farmers who had made the country a breadbasket ... as well as donors from Britain and other European countries and the United States who sustained Zimbabwe's starving millions for years.""A lot of people got farms, but they can't produce anything and this is what is causing the poverty and hunger," said Mafumera. "There's no food."Though Mafumera is presumably no expert in economics, his understanding of the political dynamics within Zimbabwe concurs with that of many experts who have made similar observations, as well as recent developments reported in the news.The BBC reported Timeson February 23 that even though the country desperately needs food, members of parliament, police, the military, and Reserve Bank of Zimbabwe officials — all loyal to President Mugabe's Zimbabwe African National Union-Patriotic Front (ZANU-PF) party — have seized 77 white-owned farms within the last few weeks. Commercial Farmers Union President Trevor Gifford told the network that the seizures have taken place since the national unity government recently took office. The new government is the result of a coalition formed between the ZANU-PF party and opposition leader Morgan Tsvangirai, who was sworn in as prime minister on February 11. Tsvangirai, the head of the Movement for Democratic Change (MDC), the main opposition party, opposes the confiscations, and observers believe that officials loyal to Mugabe stepped up the rate of seizures before Tsvangirai could assume enough power to prevent them.While the pace of land confiscation may have increased recently, it has been a routine part of an economically devastating policy that has existed since Robert Mugabe took control of Zimbabwe in 1980. The seizure of farms without compensation was prohibited by Zimbabwe's original constitution, so Mugabe initiated a referendum to amend the constitution to remove that prohibition. The newly formed MDC party — composed largely of white farmers, but also supported by much of the rural black population — opposed the referendum. A majority of Zimbabwean voters defeated it, but parliament disregarded their wishes and passed legislation authorizing uncompensated seizure of farms, which Mugabe signed into law on April 18, 2000 — the 20th anniversary of the fall of what was then Rhodesia to his communist-inspired regime.Under Mugabe, white-owned farmland was seized and turned into Soviet-style collective farms, ostensibly "to correct colonial-era injustice." Naturally, food production plummeted, bringing widespread hunger. Instead of letting Mugabe's regime die a natural death, however, the IMF, World Bank, UN, USAID, and other agencies spent years pouring in aid to prop it up. As for the poor, black farmers, they never received any of the land from the seized farms, which wound up in the hands of President Mugabe's political allies, who often used the property for personal retreats.That the seizure of white-owned farms will continue was confirmed by none other than Robert Mugabe himself during a lavish, $250,000, 85th birthday celebration held for the president on February 28, even as shortages of food, medicine, and other essentials have suppressed longevity in the country so badly that one in 10 Zimbabwean children dies before his fifth birthday. "Land distribution will continue. It will not stop," said Mugabe. "The few remaining white farmers should quickly vacate their farms as they have no place there." But as a group, it is not the white farmers who have suffered most from Mugabe's socialist land collectivization policies; most of them (the ones who haven't been killed by Mugabe's zealous followers) can always emigrate to greener pastures. It is the poor black Zimbabweans who are suffering from food shortages and the hyperinflation resulting from Mugabe's policies.As the Zimbabwean man recently interviewed by the New York Times suggested, the seizure of white-owned farms played a key role in destroying Zimbabwe's economy. Even after 20 years of Mugabe's rule, such farms constituted the only productive sector of the Zimbabwean economy. Although the farmers represented less than one percent of the population, they were responsible for 25 percent of all employment in the country and 40 percent of the nation's export earnings.The February 10, 2005 Investor's Business Daily noted that "in Zimbabwe, Robert Mugabe's dictatorship is imitating Stalin by seizing private farms and driving millions toward starvation."As in all socialist governments, governmental micro-management of the economy produced a steady decline in the nation's productivity, gross domestic product, and standard of living. Starting in the 1980s, the Mugabe government eliminated the right of companies to fire workers, tripled government spending in areas such as education and healthcare, nationalized the country's utilities and agricultural marketing sector, and increased the government's share of the GDP. The government also set artificially low interest rates, which discouraged foreign investment. Foreign investment was also discouraged by the country's restrictive regulatory requirements, which made entrepreneurship difficult.As the government sector outpaced the private sector in growth, government spending generated a chronic budget deficit, much higher taxes, and a rapid increase in the national debt. These factors all contributed to poor economic conditions.Zimbabwe Goes From Bad to WorseWith its economy killed by socialist mismanagement, the "solution" implemented by Zimbabwe's government was more socialist mismanagement, this time of the nation's money supply.Zimbabwe has a political position akin to our chairman of the Federal Reserve; it is the governor of the Reserve Bank of Zimbabwe (RBZ). Robert Mugabe appointed the current governor of the RBZ, Gideon Gono, in November 2003, and reappointed him last November to a new five-year term. Gono's ascension to this position typifies police-state politics, wherein loyalty to the strongman is more important than competence. Gono began his career with the state-owned Zimbank (Zimbabwe Banking Corporation Limited) in 1987 and moved in 1995 to the Commercial Bank of Zimbabwe (CBZ), in which the government of Zimbabwe acquired total shares in 1991 to avert its collapse. Tony Hawkins, a University of Zimbabwe economist who taught Gono 20 years ago, recently made this observation about his former student: "He was a good student but forgot whatever economics he learnt when he became a political player."Gono, who has long been Robert Mugabe's personal banker, also used political connections to inflate his academic credentials. Jonathan Moyo (who became Zimbabwe's Minister of Information from 2000 to 2005) appointed Gono to head the University of Zimbabwe Council. A writer for the Zimbabwean tabloid ZimDaily noted in a July 17, 2008 article that it is common knowledge in Zimbabwe that, as the chairman of the university's council, Gono had himself awarded an honorary doctorate degree.The ZimDaily writer was blunt in its criticism of Gono, not only for his failed economics policies, but for his ties to Mugabe's oppressive policies. After Gono was granted generous space in the pages of the state-controlled Herald newspaper a week earlier, the ZimDaily writer attacked Gono, saying the interview had "exposed Gideon Gono as a man in serious denial and an outright hypocrite who is trying to exonerate himself from the scorched earth policies he has been part of together with the military junta now illegally running or ruining the country."The article continues:
However, no matter what, the people of Zimbabwe and history will never absolve Gono for his naked complicity in destroying our beautiful country just to save his political master at all costs.Speaking in forked tongues, Gono is quoted as having said that, "Of course I don't defend anyone who murders another person, tortures another person or anyone who perpetrates violence on another person or property of another person for whatever reason.""Such people must be punished and dealt with through the law regardless of who the perpetrators of that murder, torture and violence are."Any innocent person uninitiated about the Zimbabwean crisis would clap hands and say, well said Governor! However, it's something to say good things during the day and do exactly the opposite during the night.This is rank hypocrisy and an attempt to play the angel for a man who is a Devil re-incarnate for he is part of the so called JOC that has been systematically and methodically planning, implementing and financing the violence that has created untold suffering to the innocent people of Zimbabwe.
The JOC mentioned by the ZimDaily writer is the Joint Operations Command, a national security think-tank made up of army, police, prison, and Central Intelligence Organization (CIO) chiefs, which reportedly plotted a violent campaign to secure Mugabe's victory in the June 27 one-man presidential election run-off, a charge they deny.Since last July, of course, the economies of all the world's nations have declined, but Zimbabwe's has totally self-destructed. The United Kingdom's Times observed on February 3 that "Gideon Gono, widely regarded as the world's most disastrous central banker, knocked another 12 zeros off the Zimbabwean dollar yesterday in an attempt to bring the national currency back from the realms of the fantastical. In a stroke, the governor of Zimbabwe's Reserve Bank slashed the street value of the Zimbabwean dollar from $250 trillion to one US dollar to 250 [to one U.S. dollar], because the computers, calculators and people could no longer cope with all the zeros."The article noted that the country's appalling annual inflation rate was 5,000,000,000,000,000,000,000 (five sextillion) percent.And still, Gono was focusing much of his intention on finding ways to print even more bank notes. An article posted on allafrica.com on February 11 reported Gono's statement that his country's mint, Fidelity Printers and Refiners, needed 500 million U.S. dollars' worth of new investment — not to help Zimbabwe's productive segment — but to overhaul the worn-out presses so that printing capacity at the mint can be expanded immediately to meet demand!That the issuing of new money is the economic cause of price inflation is not widely understood in Africa (and probably not in the United States, either, judging by congressional support for President Obama's "stimulus" package) is indicated by the article's lead-off sentence: "With Astronomic Inflation Requiring More and More New Banknotes, the Country's Mint is Finding It Hard to Cope."Obviously, the writer of that sentence has not figured out that the increase of the supply of banknotes is what caused the price inflation to begin with. To say that astronomic inflation requires more banknotes is akin to saying that widespread arson requires more gasoline and matches!Zimbabwe's Prime Minister Tsvangirai has attempted to remove Gono and other Mugabe-appointed officials in the new coalition government, though Mugabe has attempted to stop any such moves by making appointees permanent. In reaction to Mugabe's permanent appointment of the secretaries, Tsvangirai e-mailed a statement to Bloomberg news on February 25, in which he said: "The announcement of permanent secretaries has no force of law and is therefore null and void."Tsvangirai blames Gono for Zimbabwe's decade-long economic crisis and Attorney General Johannes Tomana for arresting officials of his MDC. The dispute over Mugabe's appointments threatens the stability of the coalition government between Mugabe's ZANU-PF and Tsvangirai's MDC.Meanwhile, because of the complete collapse of the Zimbabwean dollar, Tsvangirai has made the decision to start paying the country's soldiers and other government workers in U.S. dollars. "We will pay every civil servant in foreign currency," Zimbabwe's Finance Minister Tendai Biti told a news conference recently in Harare.In order to obtain enough money to make a first installment of $100 each on soldiers' salaries, Finance Minister Biti said he had "juggled" the books. Civil servants, teachers, doctors, and nurses would receive a similar amount. Though it is far less than what they were previously paid, it is at least enough to put a little food on the table in the short term. Much of the currency has been sent back to Zimbabwe by workers who took jobs abroad. As we have noted, Gono acquired foreign currency by sending agents into the streets to buy U.S. dollars and South African rand on the black market.During a press conference, Biti said: "We have to get Zimbabwe working again; getting teachers to school is part of efforts to get Zimbabwe to work again, having examination papers being marked is part of having Zimbabwe work again."The nation's schools have been closed for months because inflation had reduced the worth of teachers' salaries to such an extent that they could not afford bus fare to get to work. Some teachers had sold snacks to students to earn a little cash.The people of Zimbabwe have also been suffering a healthcare crisis stemming from the inability of the people to afford medical care in the country's economic climate, and from healthcare workers who have dropped out of the system to seek work in other countries. According to WHO statistics, a cholera epidemic that took hold in the country seven months ago has resulted in 82,130 cases of the illness and 3,817 deaths.Zimbabwe's LessonsAmong the most important lessons that can be learned from Zimbabwe's economic and social crisis is that too much government will destroy both prosperity and freedom.Zimbabwe is an example of an unrestrained socialist economy gone completely out of control. But socialism comes in many forms; some move quickly — communism can be described as "socialism in a hurry" — and others at a slower pace. But socialism invariably leads to the growth of government, which must be financed by higher taxes, borrowing, and/or inflation of the nation's currency. Generally, because to rely on one of these methods produces too much resistance from the population, the government employs all three methods.However, for a government to inflate a nation's money supply, it must divorce the nation's money from fixed assets, such as gold, and turn to fiat paper currency. This requires a central bank, such as Zimbabwe's RBZ, the Reichsbank (the central bank of Germany from 1876 until 1945), or our own Federal Reserve System. So essential is this feature to the socialization of a nation that the fifth plank of the Communist Manifesto called for the "centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly."Zimbabwe's hyperinflation was an extreme case that we may never see in the United States, but even the relatively more restrained inflation of the German Weimar Republic in the 1920s was bad enough to devastate the economy and set the stage for the rise of Adolf Hitler.In today's troubled economic times, Americans can follow the example of Germany or Zimbabwe and spend trillions of dollars to "stimulate" the economy, keeping the printing presses running day and night to pay the bills. Over time, the result will be hyperinflation and a ruined economy.Or Americans can return to fiscal sanity, balance the budget, abolish the Federal Reserve, restore sound currency, and return to the prosperous economy and free political system our nation enjoyed during much of the 19th century.The choice should be clear. But those who are undecided might consider Zimbabwe for their next vacation.

‘Beer and cigarettes’ keeping Zimbabwe afloat, minister says

Posted: 03:01 PM ET
HARARE, Zimbabwe (CNN) — Zimbabwe’s new finance minister Wednesday complained that President Robert Mugabe’s government is running on taxes and duties paid on beer and cigarettes.

As he presented his revised 2009 budget to parliament, Finance Minister Tendai Biti noted that “indirect taxes made up of customs and excise duty have contributed 88 percent of government revenue, which means that the government has been literally sustained by beer and cigarettes. This is unacceptable.”

Biti projected that revenue expectations for the year would come in at about $1 billion (U.S.) — some $700 million less than the figure declared earlier this year by the former finance minister, a Mugabe appointee. Biti is a member of the opposition Movement for Democratic Change party.
Projected spending for the year would be more than $1.9 billion

Wednesday, March 18, 2009

US$2 Billion Loan From Pretoria Mooted in Zimbabwe-South Africa Talks

By Blessing Zulu Washington17 March 2009
Following a meeting in Victoria falls between Zimbabwean and South African officials, official sources said Tuesday that Pretoria is considering a loan of US$2 billion to Harare.
Officials of both countries said US$1 billion would be to support government operations, while a US$1 billion credit line would be established for other purposes.
Official sources said South Africa meanwhile is advancing 60 million rand for agricultural materials. Pretoria provided R300 million for farming inputs last year.
The communiqué issued at the end of Monday's Zimbabwean-South African Joint Permanent Commission session in Victoria Falls stated stating the desire of both countries to cooperate to help Harare re-engage with the international community and lift Western sanctions.
But South Africa also urged other member nations of the Southern African Development Community to involve themselves in Zimbabwe's turnaround.
But Bulawayo-based economist Eric Bloch told reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe that Harare must downsize government before going on a begging spree

Saturday, March 14, 2009

Without aid the inclusive gvt will fail: Biti

Ralph Nkomo
Fri, 13 Mar 2009 18:45:00 +0000

ZIMBABWE'S new finance minister yesterday said that the inclusive Government will fail, with potentially disastrous consequences, unless international donors urgently inject cash into its treasury.Tendai Biti, who once said the Prime Minister had friends who would support the inclusive Government said: "Our capacity to deliver is linked to economic stability and we need help. It cannot be a chicken and egg situation; there has to be a chicken, or an egg, first."Biti said he welcomed Australia's move to boost humanitarian assistance to Zimbabwe by US$10 million, but said donations channelled through international aid agencies would not save the transitional Government. The finance minister, who is also secretary general of the Movement for Democratic Change (MDC), said: "If we fail, the consequences will be dire, such as a military coup or civil unrest."Western countries' governments that have imposed illegal sanctions on Zimbabwe have indicated that they will not immediately pour funds into Zimbabwe, or lift sanctions.Biti needs to raise a civil service salary bill - including the politically crucial police and army - of up to US$70m a month after Prime Minister Morgan Tsvangirai promised at his inauguration speed that all civil servants will be paid by foreign currency.Zimbabwe's exchequer is severely depleted and inflation is running into millions of per cent. Biti said: "I am the treasury, I am the chancellor of the exchequer, trust me. I guarantee money paid to the treasury will be correctly spent."When MDC leader Morgan Tsvangirai was sworn in as prime minister on 11 February he promised to pay salaries in hard currency. So far the inclusive Government has managed to pay a US$100 bonus to all civil servants which was suggested by then Acting Minister of Finance, Patrick Chinamasa.On Wednesday, Australia became the first donor country to announce an increase in humanitarian aid - split between the British Department for International Development and the UN children's fund, Unicef - since the inclusive Government was sworn in. Diplomats said other countries would soon follow suit, starting with Sweden, which will next week announce £7m for a UN fundraising effort for the Red Cross. Britain has yet to announce any new initiatives.Teams from the International Monetary Fund and World Bank are in Zimbabwe to study "how to resume relations" with Zimbabwe. The country is currently in arrears of US$180m. Yesterday at an IMF conference in Dar es Salaam, Tanzanian president Jakaya Kikwete said: "The economy is almost in freefall. All of us have to lend a hand."Donor countries are to meet in Washington on 20 March. A European diplomat in Harare said donors' focus was on finding ways to increase aid.The diplomat said: "Some of the humanitarian aid money is already earmarked for supplementing health workers' salaries. We are now looking at how to do the same with teachers' pay."Biti recently asked regional counterparts for $2bn (£1.4bn) over the next 10 months.

Friday, March 13, 2009

ZIMBABWE: Aid money almost too tight to mention

Aid to Zimbabwe must go beyond foodJOHANNESBURG, 12 March 2009 (IRIN) - The international humanitarian community's most important tool for raising resources for action in Zimbabwe, the Consolidated Appeals Process (CAP), is out of date and in need of revision. The question is whether appealing for more funds to keep pace with worsening conditions will actually translate into enough money to remedy them. The CAP 2009 was launched in November 2008, but "the situation in [Zimbabwe] has obviously moved on," Catherine Bragg, UN Assistant Secretary-General for Humanitarian Affairs and Deputy Emergency Relief Coordinator, told IRIN. Discussions were underway to ensure the CAP 2009 document better reflected the current humanitarian crisis in Zimbabwe, Bragg noted after leading a UN assessment mission to the country at the end of February. "The cholera epidemic is still ongoing and the humanitarian situation has gotten much worse." By early March cholera had claimed more than 4,000 lives and nearly 90,000 Zimbabweans had been infected since the outbreak began in August 2008. The food security situation is still deteriorating rapidly: the original CAP 2009 projected 5.1 million Zimbabweans depending on food aid in the first quarter of 2009, but that number is now closer to 7 million. Growing hunger, growing needs Halfway through 2008, the humanitarian community in Zimbabwe estimated it would take around US$350 million to address immediate needs in the country; by November the figure in the CAP had grown to US$550 million. The new numbers were mainly a reflection of rising food insecurity - the food component shot up from US$173 million at the beginning of 2008 to US$411 million by the 2008 mid-year review. "A 137 percent increase," Luke McCallin, the Flash Appeal Coordinator of the Consolidated Appeals Process (CAP) at the UN Office for the Coordination of Humanitarian Affairs (OCHA), told IRIN.In January 2009 the sharp increase in the number of emergency food aid beneficiaries led to a halving of cereal rations, which were already cut in late 2008 in the face of donor funding shortfalls. By March 2009 the collapse of Zimbabwe's health sector and the unprecedented outbreak of cholera caused the CAP to balloon to well over US$570 million. Expectations are that the latest revision will lift the required amount beyond that, but the exact figure remains unclear. "It is difficult to tell at this stage. There is an agreement to conduct inter-agency assessments that will inform the CAP Review," said Muktar Ali Farah, the Officer in Charge at OCHA in Zimbabwe. Asking for money is one thing; getting donors to shell out is another. As of 12 March 2008, commitments to the 2009 CAP covered a mere 18 percent of requirements. CAPs are notoriously underfunded, particularly early in the year. The average level of funding for all CAPs worldwide in 2009 so far is at 25 percent. "Zimbabwe is not far off the pace in terms of other African CAPs, either percentage-wise or in dollar amounts," McCallin said. Having the money at the right time is often crucial. "One of the problems we have in general with CAPs is that donor financial years vary widely, and so their decisions on when and how much to fund do not always correspond to the needs as we identify them. For example, we often get increased funding towards the end of the year as donors look to spend their annual amounts." 'Lifesaving' semantics Competing priorities mean the spread of limited finance across the various sectors of intervention has reached a critical point. "Zimbabwe is facing a multisector crisis. Food, health, water supply and Sanitation, and protection remain the main priorities at the moment," Muktar noted.
The problem in Zimbabwe ... is that funding has not been going to sectors of the emergency which critically need it, such as agriculture and economic recovery "The problem in Zimbabwe ... is that funding has not been going to sectors of the emergency which critically need it, such as agriculture and economic recovery," McCallin said. Sectors usually not perceived as 'life-saving' had long been downplayed due to their developmental nature. The CAP is a strictly 'humanitarian' financing tool, and thus traditionally restricted to short-term emergency needs, but does make provision for including support to communities requiring emergency early recovery to strengthen coping mechanisms and sustainable livelihoods - this is a grey area between humanitarian and development work. The CAP 2009 document noted the need to bridge the gap between what is humanitarian and what is developmental: "Support to development sectors and activities in Zimbabwe has traditionally been poor. "Considering that the CAP remains one of the few funding frameworks for donor engagement in Zimbabwe, and despite the prevailing political uncertainty, it will require more donor support to essential sectors that were critically underfunded in 2008." Getting the message out The humanitarian community has consistently advocated emergency funding for agriculture, watsan [water and sanitation], education, and HIV and AIDS. "Although they represent underlying causes and require mid- to long-term approaches, they also fall under emergency needs. For example, in Zimbabwe an estimated 2,300 persons die per week due to HIV/AIDS, and on an average only 250 persons die due to cholera," Muktar said. According to Bragg, "there are a number of sectors in particular that we need to revise. Water and sanitation and health are obvious, in terms of trying to contain cholera as well as other infectious diseases. The breakdown of the health sector had not been to such an extent when we did the consolidated appeal [in November 2008]," she commented. "Traditionally we don't include a lot of agricultural activities in a humanitarian appeal but in this case we have to look at this as life-saving, in the sense that if we don't do it, next year we will continue to have seven million people requiring direct food aid," Bragg said. "We think, and we hope, that we will be in an environment where we can carry out some of our traditional protection activities ... We think there is now a slight opening for that."
Photo: ReliefWeb
Zimbabwe and surrounding countriesDevelopment sectors would include emergency agriculture and education, health, water and sanitation, assistance to victims of politically motivated violence, and sustainable return and reconciliation in affected communities. "Any delay in addressing these needs will only result in a greater humanitarian caseload," the CAP 2009 document warned. According to McCallin, donors have picked up on the need: "Health, in the specific context of Zimbabwe, has done better this year [2009], probably because of the attention to the cholera outbreak." The health requirement was 8 percent funded in 2006, 30 percent in 2007, and 57 percent in 2008, he noted. "On a related issue, for WASH [water, sanitation and hygiene] - which is inextricably linked to the health crisis and cholera outbreak - the funding over the same few years has been 17 percent, 60 percent and 90 percent respectively. There is a trend there, which is probably improved donor response to a growing crisis."

Tuesday, March 10, 2009

Zimbabwe's Main Trade Union Sets Out Hard-Currency Pay Demand

By Patience Rusere Washington09 March 2009

An official of the Zimbabwe Congress of Trade Unions, the country's largest organized labor federation, said its members should be paid a minimum $US454 a month.
ZCTU Deputy Secretary General Japhet Moyo told reporter Patience Rusere of VOA's Studio 7 for Zimbabwe that this amount is what a family of six needs to survive.
But he said there has been resistance from employers who say private-sector workers should get the same US$100 allowance the government is giving public employees such as teachers, hospital workers, police officers and government clerical workers

No deal with Zimbabwe - Botswana

March 9, 2009

GABORONE – Botswana’s Finance minister Baledzi Gaolathe said the new Zimbabwe government has not approached Botswana for help and any decisions on a financial bail-out will only be taken at the next meeting of SADC members
Botswana has denied reports that it has a bailout plan for Zimbabwe
Gaolathe was quoted by a weekly newspaper as saying reports that his country, South Africa, Mozambique and Zambia had agreed to give emergency funding to bankroll Zimbabwe’s coalition government were false.
“The new Zimbabwe government has not approached Botswana for help and any decisions on a financial bail-out will be taken at the next meeting of the regional body – SADC,” Gaolathe said.
Contrary to expectations, Botswana is on record as saying its prescription for the solution to the Zimbabwe political crisis has not changed although it endorsed the outcome of the SADC Summit that revived the stalled power-sharing deal signed last September.
“Botswana’s position has not changed. It is still our position that a re-run election would be the only viable solution if the parties (in the Zimbabwe power-sharing deal) fail to agree or the GPA (Global Political Agreement) collapses.
If the parties fail to reach an agreement, then the only viable solution is for the people of Zimbabwe to be the ones to decide who their leaders should be through an internationally supervised election,” Clifford Maribe, the Botswana Foreign Affairs Ministry spokesman was quoted saying last month in The Nation in Gaborone.
Botswana appeared to have abandoned its position that an internationally supervised re-run of the presidential election was the best option to resolve the Zimbabwe crisis when it backed the revival of the power-sharing deal at the SADC meeting in Pretoria.
The development suggested that Botswana had abandoned its alleged preferential treatment of Prime Minister Morgan Tsvangirai of the Movement for Democratic Change (MDC-T) and thrown its lot behind his nemesis, President Robert Mugabe.
Gaolathe said Botswana would consider a request for help from Zimbabwe but its ability to assist might be severely limited by the global financial crisis.
“In the case of Zimbabwe, what we intend to do is try our best to persuade organisations that are capable of helping like the World Bank and IMF to make a meaningful contribution,” he said.
Gaolathe was reacting to reports quoting Eddie Cross, a policy adviser to Zimbabwe Prime Minister, Morgan Tsvangirai, saying that regional countries and the European Union would come to the rescue with emergency funding for Zimbabwe after 100 days of the new government lasts for 100 days.
Previously, Botswana had given the Zimbabwe government P1 million (about $125,000) for fuel as a loan that was never repaid. Recently, Botswana gave P3 million in humanitarian aid to Zimbabwe but the money was channelled through NGOs.
It is estimated that currently, the Zimbabwe government needs $5 billion to recover. Gaolathe said in Gaborone that Zimbabwe had informed African finance ministers that $2 billion was needed immediately to run the country till the end of the year.
Botswana has maintained that an internationally supervised presidential election is one of the most viable options to resolve the long-running political crisis in Zimbabwe.
It has slammed Mugabe and Zanu-PF for the Zimbabwean crisis, a development that seems to favour the MDC. Things threatened to get out of hand last year when Botswana decided not to recognise Mugabe as president of Zimbabwe.
Claims that Botswana has a soft spot for MDC have been buttressed by the ease with which Tsvangirai has been given ‘asylum’ in Gaborone whenever he is in trouble in Zimbabwe.
That Botswana endorsed a SADC deal that tasted like a bitter pill for the mainstream MDC indicates that there is a shift in how the regional grouping handles the Zimbabwean crisis

Sunday, March 8, 2009

Zimbabwe Reported to Need $5 Billion to Revive Shattered Economy

Posted by admin on Mar 6th, 2009 and filed under Africa. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry from your site
Botswana Finance and Development Planning Minister Baledzi Gaolathe on Friday in Gaborone said that neighboring Zimbabwe will need $5 billion to reconstruction the country’s shattered economy and bring down its skyrocketed inflation.
He said during a meeting of finance ministers from the Southern African region, they discussed how to move forward in helping Zimbabwe get back on its feet once again after years of a downward spiral in its economy.
“We expect more consultations to happen in the next coming months, Gaolathe said.
He recalled that Zimbabwe, during a meeting of Southern African finance ministers last week in Cape Town, South Africa, it informed the forum that it needed $2 billion dollars in immediate aid.
The two billion dollars is needed for short term needs from now until the end of the year. The country has pleaded to the Southern African region as well as the international community for the assistance,” he said.
The unity government of former opposition leader and Prime Minister Morgan Tsvangirai and President Robert Mugabe will rely heavily on donors to tame inflation, the highest in the world, and revive the once prosperous economy.
Source African Press Agency

Friday, March 6, 2009

IMF, World Bank to visit Zimbabwe next week

Thu Mar 5, 2009 1:07pm EST

By Lesley Wroughton
WASHINGTON, March 5 (Reuters) - A high-level International Monetary Fund mission will visit Zimbabwe next week after a two year break to assess the country's dire economic situation and humanitarian crisis.In a statement, the IMF said a staff mission led by Vitaliy Kramarenko will visit Harare between March 9 and 24 to conduct a regular review of the economy under the IMF's so-called Article IV consultations.The visit by the IMF is not expected to lead to financial aid for Zimbabwe, but officials said it would give the lenders an idea of the direction of government economic policy."The IMF mission will review Zimbabwe's economic situation and prospects and discuss with the authorities their policies to address the acute economic and humanitarian crisis facing the country," the Fund said."The IMF team will work closely with a parallel World Bank mission," the IMF added.The visit comes weeks after a new power-sharing government of old rivals was formed between Zimbabwe President Robert Mugabe, the country's sole ruler for nearly three decades, and Prime Minister Morgan Tsvangarai, the main opposition leader.The IMF suspended Zimbabwe's voting rights in June 2003, barring it from participating in IMF decisions, as the Mugabe government fell behind on paying its IMF debts and the economic situation deteriorated."It is an important mission for the Bank, the Fund, for the government and donors," said Michael Baxter, the World Bank's director in the region told Reuters."We're trying to get a direct assessment of the governments proposed policies, how they are starting to implement them, and how they will lead to a longer term stabilization," Baxter added.Last week, Southern African finance minister called on the World Bank, IMF and African Development Bank to help Zimbabwe recover from economic collapse and put the initial financing need at $2 billion.Under their rules, the IMF and World Bank would not be able to provide financial assistance to Zimbabwe until the country has cleared its arrears to them.The IMF said it will meet with Zimbabwe's Finance Minister Tendai Biti and other senior government officials, as well as representatives from the financial, business and diplomatic communities.A report on the visit will be discussed by the IMF board in early May, the Fund said.Tsvangarai has warned that the country urgently needs help as inflation has reached more than 200 million percent and rendered Zimbabwe's currency worthless.He also said on Thursday that nearly 4,000 people were killed and up to 80,000 infected since the outbreak six months ago of a cholera epidemic in the country and the deadliest cholera outbreak in Africa in 15 years.(Reporting by Lesley Wroughton; Editing by Chizu Nomiyama)