Zimbabwe Blues: Comrade Bob Mugabe, IMF & PRC

For those who've run their country into the ground, we salute you.

If nothing else, you have to admire President Robert Mugabe's longevity. Once a pro-independence protagonist, he's turned into...someone else. At 90 he's still fit as a fiddle. That he's been up to no good for so long, however, deserves additional comment. Despite encountering international opprobrium for a very long time, there's always been China offering financial gestures of third world solidarity with Zimbabwe. To be sure, Comrade Bob has not changed Zimbabwe into a socialist republic by constitution. However, he's been able to draw on China in tight spots time and again. He is still on top at age 90, after all.

To make a long story short, Zimbabwe is an economic basket case. After Comrade Bob expropriated white farmers in in 2008, annualized inflation reached 500 billion percent. Ever the political survivor, he hangs on somehow. Being especially strapped for cash at the moment even by Zimbabwean standards, he is in the process of negotiating with the IMF for restored funding. His country has effectively been in default with the IMF for a number of years, but seeks to become "current":

The International Monetary Fund is appointing a resident representative in Zimbabwe for the first time in 10 years as the southern African country seeks to mend relations with the lender. Christian Beddies is the IMF’s first appointment in Zimbabwe since 2004 when the Washington-based lender closed its office in the country, two officials with knowledge of the situation said, declining to be identified because they aren’t authorized to speak to media on the matter. Beddies has arrived in the country, one of the people said.

The IMF is “finalizing the process for appointing a resident representative in Harare,” who should be in place in July, the IMF said, without identifying the appointees. Zimbabwe has been in default to the IMF since 1999, former Finance Minister Tendai Biti said last year. The government said in March it will make a “token payment” to the IMF as the country works on a program to reduce its debt.

As always, the IMF will demand politically unpopular concessions--conditionalities--that Comrade Bob would rather avoid. Aside from not getting IMF emergency funding, being in its doghouse usually means not being able to access international financial markets (which the country is at least a decade away from anyway). Hedging his bets, Comrade Bob recently made a trip to Beijing for his first meeting with new President Xi Jinping. Who wouldn't welcome large, no-strings-attached soft loans? He's received them before, you know. However, he was not able to wangle cold, hard cash this time around but only some token projects. What's more, it seems the Chinese are wising up to him as they have asked for and received all sorts of collateral in return:

In recent years, perceptions have grown in the west that China builds ties and reaps economic rewards in Africa and elsewhere in the developing world through no-strings-attached deals. But Beijing’s relatively hard-nosed reception of Mr Mugabe shows that its open-wallet policy has limits. Mr Mugabe, one of Africa’s longest-serving leaders, was hoping for a $10bn financial bailout package, with an initial tranche of $4bn as sanctions cut off his ability to tap western loans, according to Zimbabwean media.

Instead, he obtained a $2bn deal for the future construction of a coal mine, power station and dam. For this infrastructure deal, Chinese loan payments had to be secured against future Zimbabwean mining tax revenues.

On top of this, Zimbabwe received a token agreement to conduct feasibility studies for other telecoms and infrastructure projects, $8m in donated rice and a $24m grant to build schools and clinics. For the feasibility studies, it had to commit to set aside revenues from state-owned companies in order to obtain loans from China’s state-owned banks – a sign of the depth of Beijing’s unease over Zimbabwe’s economy.

Ideology aside, let's just say Comrade Bob's public financial management chops are, er, non-existent. Commie bonding has its limits. Namely, inability to manage public finances to any appreciable extent. Comrade Bob, the IMF still beckons.