Our problem was that the moment Mr Mugabe took over the reins of power in 2013, he immediately reverted to the policies and programmes that had brought Zimbabwe to its knees in 2008. Let’s just remember what it was like in December 2008 – incomes for people in paid employment were down to US$5 per month, 150 000 people in Harare had cholera, 70 per cent were on food aid, schools were closed and hospitals were just glorified mortuaries, except that the bodies rotted because there was no refrigeration. Life expectancy had halved, maternal mortality of women in child birth and infant mortality for children under 5 were the highest in the world. Our population was declining by 5 per cent per annum as people fled the chaos for greener climes.
How did we survive those conditions? But we did! And when we got a half a decent Government, we rebounded and began to show just what we could do if our leaders allowed us to get on with our lives and stopped stealing our future.
No sooner had we just started out on a new road to recovery and growth when once again the political and economic delinquency returned.
When Mr Mugabe was finally forced to resign and hand over to a new leadership, tremendous damage had already been done to the economy – but the true cost was hidden by artificial exchange rates that overvalued our local currencies. When the new President, Mr Mnangagwa appointed a completely new economic team in the Ministry of Finance I do not think he really understood what the consequential clean-up was going to entail.
First the overvalued exchange rate. The new Team recognised that this had to be corrected or else the whole mountain of domestic debt in a false currency would collapse and take the country with it. They announced that the local currency was a thing called the RTGS dollar – an economic and digital animal that had no relationship in any way to the US dollar. We all knew that because we understood that if we took our pieces of Bond paper to the Bank there was no way that they could ever give us real dollars in return.
But it was when they actually said that, that we became painfully aware that we were not rich anymore. The market began to devalue the local currency, a process that has continued throughout 2019. The result is that one US dollar in our accounts in December 2018 is now worth 5,8 US Cents.
Then there was our national debt. Up to 2000 we had multiplied our national debt by ten times since Independence. Increasing our net international liabilities by US$500 million a year or just over 1,4 million US dollars a day. Our intervention in the Congo to support Kabila, doubled that sum for three years and the reparations paid out to our war Veterans doubled the debt expansion for another two years. In the four short years from 2013 to 2018, the Mugabe Government built up domestic liabilities to over US$23 billion. That is US$500 000 per Month. By November 2017 our fiscal deficit was running at 40 cents in the dollar. We were living in a fool’s paradise and way beyond our means.
So the second issue confronting the Finance Team was how to bring us all down to reality and to deal with this completely unsustainable and unserviceable debt. We had to eat the mountain and the only way to do this was to allow inflation to do its merciless work. Today the total value of the debt left behind by Mugabe is probably only US$2 billion, devalued by inflation by over 85 per cent.
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