What on earth is going on?
I have always said that if you think you know what is happening in Zimbabwe, you have not been here long enough. We are past masters at misleading everyone – including ourselves, as to what exactly is happening at any juncture.
First the economics. Steve Hanks wrote a piece the other day where he stated that Zimbabwe staggers from one major crisis to another. He was one of the few economists who carefully followed the 2000 to 2008 decent into chaos and collapse ending with prices doubling every 3 hours and the final demise of our own currency and the retreat into what was in effect dollarization. He then showed how the economy recovered and stabilized under the Government of National Unity from 2009 to 2013.
Then he plotted the journey from 2013 to the middle of 2017 and stated quite clearly that, once again disaster looms. This warning does not come from one of the multilateral institutions created for this purpose, but from an academic sitting in a study in far flung USA. If we plot the trends in GDP and debt over this turbulent period it looks like this:
Own Calculations
Talk about a roller coaster ride!! Zimbabwe goes from a reasonably stable 2000 after 20 years of uneven but gradual growth – led by agriculture and to some extent mining but associated with an average 9 per cent fiscal deficit (sustainable levels probably about 5 per cent, leading to growth in debt from US$700 million in 1980 to US$11,6 billion in 2000 including external debt). Then the wipeout in 2008 when all debt was destroyed in value along with all savings and accumulated wealth because of the long period of hyper-inflation. At the same time GDP collapsed and revenue declined to shocking levels – the Minister of Finance estimating total State revenues at just b$280 million in 12 months in 2008.