Mercifully, Zimbabwe’s infection and death rates from Covid-19 are so far very low but the economy, already labouring under the effects of drought, has been hit by the lockdowns. Worse, the IMF has decided it cannot advance any of the $50bn facility to help developing countries out of this crisis to Zimbabwe. Story by Baffour Ankomah.
Nothing is straight in Zimbabwe any more. Not even Covid-19 and all its discontents. After 20 years of Western economic sanctions imposed with the goal of stopping the land reform programme started in 2000, Zimbabwe has grown to accept that what is normal in other countries cannot be normal here.
For example, low-income countries impacted by the coronavirus have been enjoying a $50bn facility from the IMF to mitigate the effects of the pandemic, but Zimbabwe, low-income as ever, does not qualify because it owes no debt to the IMF.
Which is worse, paradoxically, because it owes a huge debt to the World Bank, the African Development Bank (AfDB), the European Investment Bank (EIB), and other international financial institutions. So heads or tails, Zimbabwe loses, even though if any nation needs donor support to fight the Covid-19 pandemic, Zimbabwe does.
The country announced its first coronavirus case on Friday 20 March. Health Minister Obadiah Moyo told the nation in a solemn televised address that a 38-year-old man, a resident of the tourist town of Victoria Falls, 880km southwest of the capital Harare, had travelled to Manchester, UK, on 7 March and returned on 15 March via South Africa, only to find that he had been infected while abroad.
Even before this first case, the government – swayed by what was happening in Europe and elsewhere – had announced measures to contain the virus. This included the closure of schools, pubs, sporting events, church meetings of over 100 members and other public gatherings.
Informal sector closed down
Later, after the first two cases were announced in late March, the government imposed a travel ban and closed the country’s borders. A three-week national lockdown was also imposed, which was later extended twice (14 days each time), making it seven weeks in a row.
Announcing the second extension, President Emmerson Mnangagwa made the wearing of face masks in public spaces mandatory, even though at the time (end of April) the national tally stood at a merciful 34 positive cases, five recoveries, and four deaths. This was at a time when the US had recorded nearly 70,000 deaths, Italy 29,000 and Britain also 29,000. Zimbabwe’s four deaths were therefore very manageable.
Thus, as part of the second extension, Mnangagwa allowed some strategic businesses (like mining and those in agriculture) to reopen but under strict conditions, even as he announced a ZW$18bn (US$60m) stimulus package to resuscitate the economy. However, government help to the needy was a bit non-committal (the President only directing vulnerable groups to “approach the Department of Social Welfare to register for assistance”). Surprisingly, the informal sector where the largest percentage of Zimbabweans now earn their living remained closed.
“As we plan to slowly return to a normal way of life,” the President explained, “it is important that we adopt a national strategy of possible exits from the lockdown, informed by the imperatives of Zimbabwe and its peculiarities. Our priority remains to reduce transmissions of Covid-19, and to gradually re-start the economy, without undermining the efforts to contain the pandemic.”
According to him, the lockdown had proved to be an effective strategy to curtail the spread of the virus, while measures such as mandatory quarantine and isolation of all returnees had been key in achieving the low infection figures.
Life versus livelihood
The worldwide debate of life versus livelihood had also been paramount in the government’s calculations. Was it to err on the side of reopening the economy or continue with the lockdown to save lives?
The government erred on the side of life. “It is imperative,” the President said, “that our nation continues to act on two fronts, namely saving people’s lives on one hand, and saving the national economy on the other hand. Hence, we have gradually lifted lockdown restrictions in some sectors, such as mining and the marketing of tobacco.”
To him, the choice was not difficult to make. “The economy can be resuscitated but you cannot resuscitate dead people,” the President explained.
“So we decided to save lives by imposing a lockdown instead of reopening the economy. We can always resuscitate the economy when the emergency passes.”
Part of the “resuscitation” is the ZW$18bn Rescue and Stimulus Package, which is equivalent to 9% of the country’s GDP or 28.6% of this year’s national budget.
“This Stimulus Package is designed to scale-up production in all the sectors of the economy in response to the adverse effects of Covid-19,” the President said. “Concessional terms and conditions that include an interest rate of 10% per annum will apply. A grace period of six months and repayment periods varying from one to four years, depending on the nature and scope of business to be financed, will be applicable,” he added.
On the whole, Zimbabwe has been lucky that Covid-19 has largely spared the country the profound agony of burying thousands and thousands of citizens, as has happened in Europe and America.
Maybe it was divine intervention. Because after 20 years of Western economic sanctions, Zimbabwe just does not have the medical and financial resources to fight a major pandemic, like the current one that has brought sheer misery to the entire world. The country’s medical service, starved of vital infrastructural and operational resources for two decades, is in intensive care itself, truth be said.
For example, the number one Covid-19 referral facility in the country, Wilkins Hospital in Harare, only has 60 beds. Other facilities were later made available nationwide but treatment resources were always meagre. Therefore, if the virus had spread into the poor suburbs where people live cheek by jowl, it would have been a total disaster. At the time of going to press, Zimbabwe’s Covid-19 tally stood at 51 cases, 4 deaths, 18 recoveries; and the government had imposed an indefinite lockdown to be reviewed every two weeks.
IMF’s cruel game
It is against this background that the playing of Zimbabwe by the IMF – a cruel game that has gone on intermittently for the last 20 years – callously took place.
Zimbabwe cleared its $107.9m debt to the IMF in October 2016. But after President Mnangagwa was elected in July 2018, his new Finance Minister, Prof. Mthuli Ncube, who has been described uncharitably by his critics as the “IMF man in Harare” (ie, doing the IMF’s bidding at the expense of national interest), embarked on a programme, with the fervour of a zealot, to pay off other debts owed to the World Bank ($1.2bn) and the AfDB ($605m).
This meant starving the country of vital financial resources to run domestic affairs, like repairing roads and providing water, fuel, and electricity – all of which have been in short supply since late 2018.
In March 2020, the IMF announced, as the coronavirus was approaching menacingly from Europe and the US (where Zimbabwe’s first cases came from), that Harare did not qualify for the $50bn IMF facility to cushion low-income countries impacted by the coronavirus. Zimbabweans could not laugh or cry. Murky does not even begin to describe it.
“The hypocrisy is staggering”, The Herald, Zimbabwe’s leading newspaper, thundered in an editorial comment on 16 April, referring the IMF to its own Article IV Report on Zimbabwe released in February 2020 in which the global lender pointedly remarked that: “While highly uncertain at this stage, it is clear that Covid-19 will adversely impact the economic outlook for Zimbabwe and [the country will] require additional health-related spending and international support.”
Patrick Imam, the IMF country representative in Zimbabwe, explained that “the $50 billion facility provides grants to cover upcoming debt services to the IMF. Now given that Zimbabwe’s debt to the IMF is zero, there is no debt service to pay, and hence the facility would not be of any use.”
Imam said the regular programmes that the IMF offered member countries severely impacted by Covid-19, such as the Rapid Credit Facility, were currently not available to any country that was in debt distress or had arrears to international financial institutions (IFIs).
“Zimbabwe still has arrears to multilateral development institutions such as the World Bank, AfDB, and the European Development Bank,” Imam explained. “IMF rules do not permit us to provide financial support in these circumstances. Thus, before becoming eligible for financial support from the IMF, Zimbabwe will need to clear these arrears.”
Embarrassingly deliberate gesture
Imam’s explanation would be ridiculous in this bitterly serious time if it was not so embarrassingly deliberate. Interestingly, on the heels of his remarks came the news that Mthuli Ncube had written to the heads of the IMF, World Bank, AfDB, Paris Club and the European Investment Bank on 2 April, asking for debt relief and a $2.2bn bridging loan to clear the IFI debts. But by 7 May, Ncube had had no replies.
Ncube told the media: “Domestic resources to allow the authorities to mitigate the impact of the pandemic are insufficient and access to external financing is severely constrained due to external debt arrears.”
Zimbabwe’s debts to the IFIs outside the IMF stand at a staggering $8.1bn, and Ncube wants to reschedule them over 15 years, with a 5-year grace period. Much of the debt – $5.9bn – is accumulated arrears, penalties, and interest arrears. Which means the principal debt itself is just $2.2bn.
This left George Guvamatanga, the permanent secretary of Zimbabwe’s Ministry of Finance, gasping: “It is very unfair for Zimbabwe to be locked out of support to deal with a global humanitarian crisis [Covid-19], which it did not create, especially considering that we were already on our own dealing with a drought and cyclone-induced crisis.”
The lesson: Pay your debts but hold some resources back to cater for a bad day, like a coronavirus attack.