In early November, Patrick Chinamasa, a veteran member of Zimbabwe’s ruling Zanu-PF party, was staring into the political abyss.

Sacked as finance minister by Robert Mugabe after delivering a budget deemed insufficiently radical, Chinamasa faced an extended period in the wilderness. By 7 December, much to his surprise and that of others, the 70-year-old found himself back in parliament, delivering the first keenly awaited budget of the post-Mugabe era following the coup that brought Emmerson Mnangagwa to power.

For Zimbabwean businesses, foreign investors, and international financial institutions alike, the budget was the first major test of whether the new administration would deliver on the promise of Mnangagwa’s bold inaugural speech and break with the disastrous economic policies of the past. Keen to capitalise on rare international goodwill, Chinamasa promised to cut spending, re-engage with international lenders and re-invigorate the flagging private sector by rolling back indigenisation.

While the plans have been welcomed as a positive start, analysts say that Mnangagwa’s government will have to deliver a far more ambitious reform agenda if it is to command the respect of the lenders whose capital it requires to reverse decades of economic stagnation. 

“Chinamasa is a reformist, he’s pragmatic with the economic situation and realistic about how bad it is,” says Judith Tyson, research fellow at the Overseas Development Institute (ODI).

“In terms of economic reform their approach is quite positive, and when you look at the budget they’re pushing for the same things that Mugabe had vetoed. The big problem is persuading people to give them finance – it’s going to be tough,” she adds.

Foremost among those yet to be convinced is the International Monetary Fund (IMF). Harare has a long and troubled  history with the Washington-based lender, which has refused to extend additional credit in recent years following Zimbabwe’s accumulation of billions of dollars of international debts.

Until now, the government has struggled to clear its arrears, and has resisted conditions laid down by the Fund, including compensation for white farmers dispossessed in the controversial land reform programme of the early 2000s.

While Mnangagwa broached the thorny subject of white farmer compensation and promised to safeguard the interests of foreign investors during a well-received inaugural speech, the IMF is likely to demand concrete action on dozens of metrics before seriously mulling extensive financial support.

“They’ve been very hard-nosed about it. Chinamasa has a good relationship with the IMF – much more so than Mnangagwa – but they’ve really been keeping his nose to the grindstone and saying no, not until this has been delivered,” says the ODI’s Tyson. “The trouble is, that creates a catch-22 where even if the government has the best intentions, they need the finance to do it. If you don’t give it to them you create failure immediately.”

Wage bill

One of the Fund’s most enduring demands – progress on which is essential to ease the finance logjam – is action on a public sector wage bill estimated to account for over 90% of the budget. For decades, that wage bill has included overly generous salaries for well-connected Zanu-PF cronies, comfort payments to the police and army to ensure loyalty, and cash for thousands of infamous ‘ghost workers’ who draw salaries without performing any functions. 

In his budgetary speech, Chinamasa took aim by slashing 3,700 youth officers, reducing the number of official vehicles and cutting costly foreign travel. He also pledged to more than halve a 10% of GDP budget deficit and roll back indigenisation, the process by which 51% stakes in foreign-owned enterprises are handed over to black Zimbabweans – often the politically well-connected. Nevertheless, many see plans to phase out public workers over the age of 65 and the opening of a voluntary retirement scheme as insufficient.

“It’s not going to make much difference. The numbers I looked at a year ago suggested you need a 40% fall in wages, and I would suggest these measures would take just a couple of percentage points off the wage bill,” says Charles Robertson, global chief economist at investment bank Renaissance Capital.

Those hoping for more radical action from Chinamasa may be discouraged by his chequered history. While his hands were undoubtedly tied by Mugabe and the hardline factions of Zanu-PF who ultimately had him sacked in November, Chinamasa’s previous four-year stint as finance minister from 2013 was marked by continued stagnation and a botched attempt at introducing bond notes as an alternative currency.

“It’s hard to know how much of this was his responsibility, but since 2008 the government spent all of the gains from rising commodity prices on public wages, didn’t invest enough in infrastructure investment and when commodities prices collapsed they didn’t cut wages,” says Robertson. “They introduced bond notes to try and fill the gap, and they’ve lost perhaps 40% of their value relative to the dollar.”

Committed to reform?

Whether or not Chinamasa is committed to a more pragmatic economic stance, the fate of his fragile reform agenda in Zimbabwe’s febrile post-coup atmosphere is likely to lie elsewhere. Any attempts to cut army wages – or limit the military’s access to the patronage systems and natural resources on which it has long gorged – are likely to be fiercely resisted given its key role in bringing Mnangagwa to power. Mineral resources reform, including reasserting civilian control of diamond mine ownership, looks distant, as does reform of a crucial agricultural sector mired in inefficient smallholder ownership.   

Meanwhile, the president himself – a regime loyalist through decades of political repression and economic stagnation – disappointed analysts with his appointment of a continuity cabinet and a spurning of opposition voices. With such a mixed picture, many believe next year’s elections could prove a watershed moment for the country’s political and economic future and a key metric for the IMF.

“If they have good elections next year and allow the opposition to campaign in a fair way and it’s well conducted, that would be a significant signal for international financial institutions and private investors,” says Tyson. “In the meantime they need to be enacting reform and won’t see much finance until they do.”

Nevertheless, there remains residual confidence that Chinamasa can help push through basic reforms which could go a long way to rescuing a country which, despite decades of economic abuse, retains undoubted potential.

“Improve the business environment, sort the budget and current account out and Zimbabwe’s electricity, literacy and proximity to South Africa all suggest it should boom,” says Robertson. “It’s a struggle to keep that country down. You have to work hard.”

David Thomas

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