HARARE - As Zimbabwe's economic meltdown accelerates, a catastrophic shutdown of important government functions is looming, with insiders telling the Daily News on Sunday yesterday that the cash squeeze that has been crippling the fiscus over the past two years has now reached a “crisis” point.
“Listen, we are in s..t (swear word for big trouble),” a senior government official with intimate knowledge of the treasury said resignedly, adding: “The economy is in free-fall and government coffers are running dry, and no one appears to have a clue of what to do. I fear for the worst”.
The despondent official spoke as government once again delayed payments to pensioners this month — who will now only get their meagre stipends mid next month — as the State battles to juggle its modest resources, amid the worsening economic crisis that has resulted in the closure of thousands of companies and the loss of hundreds of thousands of badly-needed jobs.
But the official who spoke to the Daily News on Sunday said the delayed payments to pensioners was “a picnic, as terrible as it is”, with his biggest fear being that the entire government machinery was perilously close to shutting down because of the debilitating cash squeeze.
“The big issue now, the way things are going, is when, not whether government will run out of cash to keep key services going and to pay civil servants such as the police and teachers. And here, I’m not talking of delayed payments, I’m talking of a complete inability to pay,” he said.
Another official said “all is not well in the state of Rome”, adding, “the money we were promised by our Chinese friends is not coming through, and the ongoing company closures and the recent job losses mean that government revenues are progressively getting less”.
The government currently spends three quarters of its $4,1 billion budget on the salaries of its employees, and so far this year, recurrent expenditure, mostly wages, have eaten up 96 percent of monthly revenues -- squeezing out essential capital expenditure.
Economist and opposition legislator, Eddie Cross, said yesterday that the state was now clearly “incapable of maintaining itself” and meeting its essential obligations.
“The consequences will be fully established by year end where we are likely to see hospitals unable to function, except as mortuaries, and schools becoming day care centres for young people who will not get any education. The Diaspora will struggle to feed their extended families back home,” he said.
“Internationally we remain as isolated as ever. Even the Chinese are saying that to qualify for their assistance we have to reform the way we do things. In the absence of fundamental political, social and economic reforms, there will be no possibility of any international assistance. The only option for Zimbabweans caught up in this spiralling crisis will be to flee and find refuge in other countries,” Cross added.
Analysts have said Zimbabwe has once again hit the depths of humanitarian and economic despair that were last experienced in 2008, when the country’s seemingly unending political crisis precipitated an economic meltdown of monumental proportions which culminated in the death of the Zimbabwe dollar and the establishment of the hope-inducing government of national unity.
Speaking recently in interviews with the Daily News on Sunday’s sister paper, the Daily News, the analysts said the only difference between then and now was that supermarkets were currently full of goods unlike seven years ago — although very few Zimbabweans were able to afford the goods as joblessness and poverty levels in the country continued to increase exponentially.
The analysts put the blame for the country’s escalating political and economic crisis at the door of President Robert Mugabe and Zanu PF, saying the ruling party had more appetite for its mindless factional and succession wars than resolving Zimbabwe’s myriad challenges and advancing the lives of long-suffering citizens.
Afghanistan-based analyst Maxwell Saungweme said unless “something dramatic” happened very soon, Zimbabwe was in fact headed for a political and socio-economic crisis that was worse than that experienced in 2008 when the country recorded one of the worst inflation levels ever reported anywhere in the world, where shop prices were literally changing by the minute.
“In 2008 we had our own currency to play with, though it was valueless, but this time around we have the US dollar which is hard to get for both the cash-strapped government and the people. Unemployment is also currently much, much higher than in 2008 and getting worse.
“Add to all this the fact that the government is more clueless this time than before, in terms of providing economic reprieve for the people. And donors have also cut back on support to civil society and non-governmental organisations that used to provide life-serving interventions.
“Politically, Zanu PF is more divided than before, to the extent that government is actually dysfunctional. Depressingly, even opposition political parties are also divided and can’t even lobby other governments to pay attention to the situation in the country. This is why I say we are heading for disaster,” a despairing Saungweme said.
Respected academic and political commentator Ibbo Mandaza said with Mugabe in power, there was little hope of the economy reviving any time soon.
“I hope it’s not going there (to 2008) and I hope something can be done. Clearly, we need a political solution, but as long as Mugabe is there, there is no hope,” he said bluntly.
Renowned economist John Robertson said the situation that currently obtained in the country was already “statistically worse” than that which prevailed in 2008.
“I think we’re back to 2008, and in some cases it is actually worse than 2008. On the employment front, the number of people who are unemployed now is worse than we had in 2008.
“Statistics show that we actually have the same employment figures as we had in 1968, almost 50 years ago. While two million jobs were supposed to be created, we only have about 700 000 people employed, of which half of them are employed by the government,” Robertson said.
He said the only reason why most people appeared not to realise the depths of the damage to the bleeding economy was that there were no shortages of goods in shops.
“The purchasing power for 2008 seems to be higher than now because wages were being paid and people had money to buy goods, though the goods were not available. Now people do not have money, but goods are available.
“It’s a process which has many contributing factors such as the cost of doing businesses, which is very high and which means that we can’t compete with imports,” Robertson said, adding that power shortages and poor investment policies had also crippled prospects for economic growth.
Zimbabwe Democracy Institute director, Pedzisai Ruhanya, said while the situation may not necessarily go back to 2008, because of the mitigating factor of the US dollar that was the major currency of commerce in the country — and which meant that those few people who still had jobs and had a steady income could be spared the horrors of 2008 — Zimbabweans should not expect the country’s economy to improve with Mugabe in power.
“The Zimbabwe crisis is fundamentally a political problem. President Robert Mugabe must leave power, as it does not make sense to have a 91-year-old determining the future of the country. Where is his future? We need young and energetic people who have an understanding of the global economy to take charge.
“What we also need to do is to reform the politics of the country. Zanu PF is talking about liberalisation of the economy when they cannot appreciate liberal politics,” Ruhanya said.