Former Zimbabwean finance minister Tendai Biti has described a recent trip by his successor, Patrick Chinamasa, and the Reserve Bank of Zimbabwe governor, John Mangudya, to London to seek new lines of credit as an "own goal".

"London was an own goal on the part of the Zimbabwe government. They underestimated the level of mistrust prevailing towards the Harare administration," Biti told Business Times this week. "The bubble has burst and what we are witnessing now is the near collapse of the economy."President Robert Mugabe has often sparred with the West since wide condemnation met his programme of farm seizures in 2000, and he has urged his lieutenants to adopt a "look East" policy.The policy has, however, so far failed to pay dividends, as China and Russia have been coy about extending financial aid to Harare given its poor record in servicing its debts.story_article_left1The IMF said last week that it would not extend any new financing programme to Zimbabwe until it cleared its arrears. Zimbabwe is indebted to the tune of $10.2-billion (about R146-billion) to various lenders, which include the IMF, World Bank and African Development Bank.Economic observers said the unwillingness by Mugabe to undertake deep economic reforms such as expenditure cuts and retrenchment of the public workforce made it even more unlikely that the IMF would dole out any credit."There is no financing programme under discussion with Zimbabwe at this point. However, the authorities have announced a plan to clear their arrears with the fund and with other international institutions as part of their re-engagement with the international community," said Gerry Rice, the IMF communications department director."Once the arrears are cleared and our board [has approved] the normalisation of relations with Zimbabwe, any request from the authorities for financing would then be considered."The refusal to extend new lines of credit to Harare puts Mugabe's administration firmly up against the wall.It already has to contend with the collapse of agriculture, compounded by drought last season; poor global commodity prices; and weak local manufacturing output. The economy is projected to grow by 1.1% this year.Agitation is also growing among its 550,000 public servants, who have not been paid this month. On Friday the government announced it would pay July salaries to the army tomorrow and police on Wednesday. Teachers and the rest of the civil service will be paid early in August.The wage bill of public servants gobbles up 93% of all monthly revenue collected by the government. Revenue sources are shrinking as companies fold and the economy becomes increasingly informal.Biti warned that the government would not be able to pay salaries at all in the next few months.As for its debt, Zimbabwe missed a deadline at the end of last month to pay arrears of $1.8-billion. The deadline to clear arrears has been moved to September, before the board meetings of the World Bank and African Development Bank take place."What's needed is a transitional council to take over, because the current administration has dismally failed. This is a gangster regime that must resign," said Biti.Meanwhile, regional neighbours are also ratcheting up pressure on Zimbabwe over a new law enacted this month to restrict the importation of selected products. Zambia and Malawi this week joined calls to increase import duty tariffs on Zimbabwean products in response.South Africa is seeking a meeting with Zimbabwean authorities over the latter's "breach of trade protocols". The Zambian Association of Manufacturers said this week that if Zimbabwe could not retract the law, it was time for the Zambian government to "retaliate".Denford Mutashu, the president of the Confederation of Zimbabwe Retailers Association, said Zimbabwe's neighbours had to understand its decision was to protect its local industry."Our neighbours must see the opportunity to come and set up industries in the country and help revive the manufacturing sector, " he said...