SADC decreed that a runoff election be held in June, but by then the government had unleashed a horrific wave of violence aimed at intimidating the opposition and its supporters ahead of the planned second round of voting. Security forces and ZANU–PF-linked militias, popularly known as the Green Bombers, killed hundreds of people and displaced thousands of others. As the secretary-general of the MDC at the time, I was arrested on treason charges and accused of having unlawfully declared Tsvangirai the winner. Eventually, SADC forced Mugabe and Tsvangirai into talks that led to the formation of a unity government.
When I became minister of finance in the unity government, it was my job to tame the hyperinflation and repair the wrecked economy. By the time I took office in February 2009, there was no escaping dollarization, which meant recognizing the U.S. dollar as legal tender in Zimbabwe. The market had already jettisoned the Zimbabwean dollar and its cousin the bearer check, both of which had become little more than instruments of arbitrage for politicians with privileged access to hard currency. There would be a long-term cost to dollarization, as we knew from other countries that had been forced to take this step. The experience of Panama, El Salvador, Peru, Argentina, and other Latin American countries showed how difficult it is to resurrect an abandoned currency. Those countries that have succeeded in doing so, such as Mexico, Pakistan, and Sierra Leone, have been forced to use the dollar as a peg. The truth is that currencies are only as strong as the public’s trust in them, and where a foreign currency has supplanted the local one, trust can never be salvaged.
Regrettably, ZANU–PF seemed to forget the lessons of the unity government as soon as it regained power in 2013.
Dollarization solved the immediate issue of hyperinflation, but I knew it wouldn’t be enough to restore macroeconomic stability. For that, Zimbabwe needed to slash its budget deficit and begin paying down its burgeoning public debt. Through a carefully managed process of cash budgeting, my team oversaw fiscal surpluses from 2009 until 2012, the last full year of the unity government. At the same time, we lifted cumbersome regulations, including price controls and a minimum-wage regime that had inhibited growth. By December 2009, inflation had fallen to negative 7.7 percent, and for the first time in 12 years, Zimbabwe recorded a positive growth rate, in this case 7.5 percent. The average real growth rate during the unity government’s tenure was nine percent, peaking at 11.9 percent in 2011.
Regrettably, ZANU–PF seemed to forget the lessons of the unity government as soon as it regained power in 2013. After winning an election marred by intimidation and manipulation of the voter rolls, among other electoral swindles, Mugabe’s government reverted to its default setting and embarked on a reckless spending spree that swelled the budget deficit to 25 percent of GDP. To fill the gaping hole in the budget, the government borrowed some $4 billion from the Central Bank over the next four years, far beyond the limits allowed by law. In addition, between 2013 and 2016, it issued over $7 billion in treasury bills, despite being effectively broke. And so it was that by November 2017, when the military toppled Mugabe and installed former Vice President Emmerson Mnangagwa in his place, Zimbabwe was once again on the brink of economic collapse.
The 2018 general election offered a golden opportunity to reverse course. But instead of the free and fair election that Mnangagwa promised, Zimbabweans got one that international observers called “deeply flawed” and that was followed by a brutal crackdown on opposition politicians and their supporters. Facing threats to my life, I briefly sought refuge in Zambia, from where I was deported back home to face charges of “falsely and unlawfully” announcing the election results—this time, in favor of MDC leader Nelson Chamisa.
Continued next page