IMF policies wreak havoc in Zimbabwe

Issue 

By Colin Stoneman and Joe Hanlon

Zimbabwe faces economic crisis after being tricked into introducing structural adjustment by donors who are withholding aid in an effort to force still further changes.

Donors are squeezing Zimbabwe because during the 1980s it resisted economic and political changes ordered by the industrialised world.

Using the World Bank and International Monetary Fund, the United States and Europe have forced most Third World countries to introduce a Thatcherite free-market, free-trade package known as "structural adjustment". Donors claim the program boosts economic growth, but in fact it increases poverty, slows industrialisation and makes poor countries more dependent on the rich, while forcing them to repay debts.

Zimbabwe became a key symbol because it refused to introduce structural adjustment and so had one of the highest growth rates in Africa during the second half of the 1980s. Majority-ruled Zimbabwe also continued to industrialise when the US and Britain wanted a white-dominated South Africa as the regional economic power instead.

Zimbabwe agreed in mid-1990 with then World Bank head Barber Conable to implement a home-designed five-year phased program towards a freer market. During the first year, Zimbabwe was to lift many restrictions on imports. At a donors conference in Paris in March 1991, the World Bank and western countries promised US$690 million to fund the first year of the program.

But donors backtracked, demanding much more rapid change than originally agreed. Little of the promised funds has been given, and donors say it will not arrive unless Zimbabwe negotiates a more free-market deal with the World Bank. University of Zimbabwe economist Jonathan Moyo says Zimbabwe is being forced to "surrender to the whims and caprices of the World Bank and the IMF".

But Zimbabwe had kept its side of the bargain, and imports are flooding in without money to pay for them, causing a foreign exchange crisis. The government has been forced to devalue, cutting the Zimbabwe dollar to half its value and fuelling inflation.

Gross domestic product, which had been rising at over 4% a year (far above the African average) increased only 1% in 1991, the first year of structural adjustment. Industrial production, which had been rising nearly 6% per year, fell back to 2%.

Even Zimbabwe's domestic capitalists object to a program that can only benefit transnational corporations at their expense. The Zimbabwe stock exchange average, which had increased tenfold during five years under a "socialist" government, fell by 15% in the first year of ructural adjustment.

Meanwhile, structural adjustment is contributing to a food crisis. Zimbabwe has always been a surplus maize producer, with stockpiles of more than 1 million tonnes to tide the country over drought years. This year, however, it will have to import maize, because the World Bank doctrine that state companies must make a profit forced the Grain Marketing Board to sell off its stockpiles last year.
[From the UK Socialist.]

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