IMF slams govt as consumers mob banks

In a scathing report this week the International Monetary Fund (IMF) laid the blame for Zimbabwe's economic troubles squarely on the shoulders of the government. The Fund said in an annual review of the country's economy: "[IMF] directors observed that this sharp deterioration primarily reflects the government's inappropriate macroeconomic and structural policies, in particular loose financial policies and increased regulation and government intervention." Earlier this month the country's Central Statistical Office pegged the inflation rate for June at 364.5 percent, more than 64 percent up from the previous month's high of 300 percent. Zimbabwe's consumer council complained that the latest jump in inflation would put the price of basic commodities further beyond the reach of the urban poor. The Fund noted that the impact of the government's current economic policies was exacerbated by the controversial land reform programme, a series of droughts and the HIV/AIDS pandemic. The UN World Food Programme (WFP) has estimated that 4.4 million people in rural areas and 1.1 million in urban areas will require food assistance in 2003/04. Another concern was the rapid decline in investor confidence. The Fund said the flight of foreign capital from the country was largely due to "concerns over political developments, weak governance, corruption ... and the selective enforcement of regulations". Foreign investors pulled an estimated Zim $17.3 billion (US $20 million) out of the Zimbabwe Stock Exchange (ZSE) in the first six months of this year, more than five times the amount of funds withdrawn by foreign businesses last year. Developments in Zimbabwe had also impacted negatively on neighbouring countries. Observers say the worsening situation in Zimbabwe has affected investor confidence in the entire southern African region. However, the government was credited for its attempts to arrest the economic decline. "[The] Directors considered the government's recent steps to adjust exchange and interest rates and fuel and electricity, and ease price controls, to be steps in the right direction." But the magnitude of the economic crisis would require "significant further enhancement of the scope and speed and stabilisation efforts". The government could not be reached on Tuesday for comment. In a related development, armed riot police were out in force for a second day as thousands of Zimbabweans mobbed banks in major towns, unable to access money or cash cheques, the Associated Press reported on Tuesday. The government has said the Reserve Bank had insufficient funds to import the special ink and paper needed to print more money, thus causing the shortage of bank notes. For the full IMF report: www.imf.org