Will International Donors Open Their Wallets for Zimbabwe?

After much political unrest and severe economic crisis Zimbabwe’s political rivals finally appear to have found common ground. At the end of the long negotiation talks held between President Robert Mugabe and the leaders of opposition, they have agreed to a power-sharing deal. This could be a sigh of relief for the teeming millions of Zimbabwe who have been subjected to the political and economic crisis for years together. But, it is still not clear how Zimbabwe’s political arch-enemies will manage to work together.

Will this be good enough for international donors to open their wallets? Zimbabwe badly needs outside help. The central bank has failed to rein in hyperinflation—now officially over 11m% but in reality probably over 40m%. So devalued is Zimbabwe’s currency that the bank was forced to announce this week that it would allow some shops to trade in foreign exchange. Farming and manufacturing have collapsed, and shortages are crippling. Some 2m people urgently need food handouts, a number likely to swell to 5m by early next year.

To mention recently Zimbabwe had to take a loan of US$300 million from South Africa to pay the IMF. The load alone is not enough and Zimbabwe will need much more financial help from its Asian allies to ward off a total collapse. The often-violent seizure of thousands of white-owned farms for redistribution to black Zimbabweans, combined with years of drought, has destroyed the country's agriculture-based economy. Inflation has soared to 164 percent, and Zimbabwe is also suffering critical shortages of food, fuel and foreign currency.

We have to wait until Monday (September 15, 2008) when the details of the agreement will be made public. Our eyes would be on the economic policy changes that would be taken up after this power-sharing to counter the economic downturn in the country.