Nacala Special economic zone: Over US$2 billion invested from 2009 to June
The respected economic analyst Roberto Tibana has done an interesting table setting out three scenarios in response to the debt crisis for the next five years: “Dig in your heels”, “Muddle through” and “Bite the bullet” (or “take the bull by the horns”). The first means the hard line inside Frelimo holds and there is no settlement with Renamo, no resolution of the debt crisis, hyperinflation and riot. Muddle through means selling enough assets to settle some of the debt, accepting austerity and gaining some donor/lender support without a forensic audit. The outcome would be high inflation and continued contraction of the economy, but there would be a settlement with Renamo and protests would be limited. The third involves meeting the donor/lender demands and regaining budget support, but at a high price in austerity and also dramatic political changes including the rise of political forces different from Frelimo and Renamo. The chart is posted on http://bit.ly/29w7tou (in Portuguese only in the most recent version).
Comment: Scenario planning is subject to many criticisms and all scenarios are subject to debate, particularly because the outcome is usually built into the assumptions. Nevertheless, Tibana’s scenarios are a useful first attempt. Most interesting is his conclusion that Frelimo loses out by giving in to donors and IMF because that provokes political change, and in political terms Frelimo does better with the middle “muddle through” scenario because it continues to hold power. “Muddle through” is similar to my “something will turn up” and Africa Confidential‘s “ostrich position” and does seem to be what Frelimo is doing.
My “Something will turn up” is on: http://bit.ly/28SN7QP
By: Joseph HanlonSource: News reports & clippings