Bailout

The politics of debt in Zimbabwe

By Felix Salmon

It’s worth remembering, in an era where Greece and other countries are being pilloried for fudging the amount of their national debt to make it look smaller than it actually is, that there’s another group of countries which is often accused of the equal and opposite crime. Governments looking to take advantage of the World Bank’s HIPC program, in which they get classified as Heavily Indebted Poor Countries, need to demonstrate not only that they’re poor but also that they’re heavily indebted. And so they have an incentive to fudge their books to make it look as though they owe more than they actually do. If they’re successful, the World Bank, Paris Club, and even private creditors are likely to more or less wipe out the debt entirely.

But if there’s one country which is pretty much guaranteed to look at the economically obvious thing to do and then fight and shout to do exactly the opposite, it’s Zimbabwe. And Zimbabwe’s ambassador to China, Christopher Mutsvangwa, has a hugely entertaining 1,500-word rant about exactly why Zimbabwe should not want to achieve HIPC status at this “most propitious time for the country”. I’ll quote the beginning, you can take it from there:

Harare ? HIGHLY Indebted Poor Country status is not the answer to the Zimbabwe debt problem.

Zimbabwe is not Haiti.

The country does not suffer from inherent incapacity that would require outside management of its resources for it to get out of the debt, which was exogenously induced.

For a start, Zimbabwe has much-valued assets. The modern industrial revolution added more than mere gold to its treasure trove of mineral riches.

Zimbabwe has diamonds, platinum and chrome — minerals that feature among the creme-de-la-creme of international mineral Olympics. Zimbabwe also has coal, methane, iron ore, limestone, lithium and a bevy of other minerals in abundance.

Add to these mineral resources, the fertile, well-watered soils that can support flourishing agro-industrial activity.

Top this all with one of Africa’s most developed human resources base that is a product of post-independence’s educational policy.

Be wary of Spartans bearing gift gourds

Maybe Europe could have benefited from Zimbabwe’s post-independence educational policy: the Zimbabweans are clearly more “wary of Spartans” than the people at Eurostat were.

(Thanks to Matthew Tubin for the find)

Full post as published by Macroprudential on March 04, 2010 (boomark / email).