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SADC economic rescue package for Zim not workable - Dr Mandaza

SADC economic rescue package for Zim not workable - Dr Mandaza
By Kingsley Kaswende in Harare
Wednesday July 11, 2007 [04:00]

AN economic rescue package being mulled by SADC for Zimbabwe, where the Zimbabwean dollar is to be pegged to the South African rand cannot succeed, Zimbabwean intellectual Dr Ibbo Mandaza has said. SADC in April mandated Executive secretary Dr Tomaz Salomao to rescue the Zimbabwean economy from further deterioration and to moot an economic rescue package for the country.

His study of the economic situation was completed at the end of June, and Dr Salomao was in the country until Sunday for a “retreat” where he met with senior government officials and international donor agencies.

It is understood that the SADC economists in Dr Salomao’s team have recommended that a plan be made to extend the rand monetary area into Zimbabwe in an attempt to stabilise the exchange rate of the Zimbabwe dollar and curb inflation, now at 4,530 per cent.
Currently, the rand monetary area operates in South Africa, Swaziland, Lesotho and Namibia .

It is also understood that the central banks of South Africa and Botswana, the strongest economies in the region and whose countries have borne the worst effect of Zimbabwean emigration, would pump several millions of dollars into the Reserve Bank of Zimbabwe.
This would prop up the Zimbabwe dollar, which has become almost worthless.
Currently, it is pegged at around Z$150,000 per US dollar.

But Dr Mandaza, who is director of the Southern African Political Economy Series Trust, said it was currently impossible for SADC to pursue that line.
“This is a purely speculative thing and such a thing wouldn’t happen,” he said in an interview yesterday.

Dr Mandaza said there were a lot of things to be considered before that could be pursued.
“It also depends on what resources are available. SADC is mainly donor funded and I guess even for the study to go on they must have obtained funding from somewhere. And given the current standoff between Zimbabwe and the donor community, the latter will have to impose preconditions pending the outcome of the Mbeki initiative,” he said.
He also said the rescue package had budgetary implications for the ‘generous’ country.
“Are these countries really prepared to dip into their budgets for this exercise?” he asked.
Dr Mandaza, however said the plan could be bait for President Robert Mugabe to accept the conditions of the talks.

President Mugabe would first have to agree to fundamental political reforms in the negotiations with the opposition Movement for Democratic Change, which started in Pretoria on Monday, if the plan is to go ahead.

South African President Thabo Mbeki was mandated to mediate between President Robert Mugabe's ruling ZANU-PF and the opposition.
The new efforts came as the Zimbabwean government embarked on drastic measures to try and control runaway inflation, warning that his government would deal with firms perceived to be profiteering excessively, and to worsen the economic situation in a bid to incite Zimbabweans to revolt against the state.

State price controls have been effected and several price-freezing violators were arrested over the weekend.

Labels: MDC, SADC, ZIMBABWE

posted by MrK @ 5:46 AM