With the introduction of licences for companies to trade in foreign currency, Air Zimbabwe started demanding in November that it no longer accepted payment for regional and international air fares in Zimbabwe dollars.
Only local routes were payable in local currency.
The measure was designed to enable the national airline to meet its external debt obligations and to pay for spare parts and other costs which accounted for 90 percent of its costs.
Full cable:
Viewing cable 08HARARE1025, ZIM NOTES 11-14-2008
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|
Reference ID |
Created |
Classification |
Origin |
VZCZCXRO2792
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #1025/01 3221408
ZNR UUUUU ZZH
R 171408Z NOV 08
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 3693
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 2126
RUEHAR/AMEMBASSY ACCRA 2428
RUEHDS/AMEMBASSY ADDIS ABABA 2546
RUEHRL/AMEMBASSY BERLIN 1046
RUEHBY/AMEMBASSY CANBERRA 1822
RUEHDK/AMEMBASSY DAKAR 2177
RUEHKM/AMEMBASSY KAMPALA 2602
RUEHNR/AMEMBASSY NAIROBI 5030
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 1695
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC
RUEAIIA/CIA WASHDC
UNCLAS SECTION 01 OF 03 HARARE 001025
AF/S FOR B. WALCH
ADDIS ABABA FOR USAU
ADDIS ABABA FOR ACSS
NSC FOR SENIOR AFRICA DIRECTOR B.PITTMAN
TREASURY FOR D. PETERS
STATE PASS TO USAID FOR L.DOBBINS AND E.LOKEN
COMMERCE FOR BECKY ERKUL
SIPDIS
E.O.12958: N/A
TAGS: PGOV PREL ASEC PHUM ECON ZI
SUBJECT: ZIM NOTES 11-14-2008
———–
¶1. SUMMARY
———–
Topics of the week:
– SADC Attempts to Impose Political Solution…
– Protesters Beaten by Police, One Miscarried in Custody…
– RBZ Returns Global Fund Money…
– Diamonds are a Crooked Politician’s Best Friend…
– Visiting American Surgical Team Moves to Private Hospital…
– African Human Rights Commission Berates Zimbabwe…
– Zim troops in DRC?…
– Air Zimbabwe Demands Fares In Foreign Exchange…
– Reserve Bank of Zimbabwe (RBZ) Re-instates RTGS…
– Cash Withdrawal Limit For Companies Raised and Forex Surrender
Requirements Relaxed…
– Power Utility Stops Accepting Checks For Settlement Of Bills…
– Zimplats to Cease Open Pit Mining…
———————————
¶2. Price Movements-Exchange Rate
and Selected products
———————————
Parallel rate for cash shot up to Z$600,000:US$1
Check rate skyrocketed to Z$20 quadrillion:US$1 aginst inter-bank
average of Z$10,789:US$1
Breadon the parallel market doubled to Z$500,000
Sugr shot up to $2,500,000/2kg
Petrol and diesel qadrupled to Z$1,000,000/liter
—————————-
On the Political/Social Front
—————————-
¶3. SADC Attempts to Imose Political Solution… At a SADC summit
in Soth Africa on November 9, where only five heads of tate
(including Mugabe) were represented, SADC dscussed the political
impasse in Zimbabwe and ina communiqu suggested that the MDC and
ZANU-PF form a government and share the Home Affairs Ministry. MDC
leader Tsvangirai rejected this proposal. The MDC issued a
statement opposing not only the Home Affairs solution, but also
criticizing SADC for failing to tackle other issues: an equitable
distribution of all ministries, agreement on Constitutional
Amendment 19 (encapsulating the September 15 agreement) as a
precondition to establishment of a government, agreement on division
of provincial governors, composition of the national security
council, and discrepancies between what was agree to by the parties
on September 11 and what was signed on September 15. In an
interview on November 13, Arthur Mutambara told the press that
Zimbabwean leaders should respect SADC’s resolution, but Mutambara
has so far indicated he will not enter the government unless
Tsvangirai does.
¶4. Protesters Beaten by Police, One Miscarried in Custody… The
National Constitutional Assembly (NCA) held protests in five cities
on November 11, calling for a political solution. Riot police broke
up protests in four cities and arrested over two dozen protesters.
NCA reports that one woman who was three months pregnant was kicked
repeatedly while in police custody in Mutare and had a miscarriage.
Some protesters have been released after paying a fine. Police
preventively detained NCA leader Lovemore Madhuku for about four
hours to prevent him from participating.
HARARE 00001025 002 OF 003
¶5. RBZ Returns Global Fund Money… Less than a week after The New
York Times broke the story on the Reserve Bank’s “diversion” of over
US$7 million that was donated to Zimbabwe by the Global Fund for
AIDS, TB, and Malaria, the RBZ returned the funds to the account.
Zimbabwe’s application for Round 8 funding was approved this week.
¶6. Diamonds are a Crooked Politician’s Best Friend… Zimbabwe’s
diamond fields have become a source for those with connections to
enrich themselves. See Harare 1016
¶7. Visiting American Surgical Team Moves to Private Hospital… The
volunteer medical team providing free cleft lip and palate
operations moved from the largely defunct government-run Harare
Central Hospital to the privately-funded St. Anne’s Hospital in
Harare. Inadequate facilities at Harare Central limited the number
of operations they could perform. The team is scheduled to leave
Harare on November 15 and plans to come back in six months for
another round of surgeries. See:
http://www.mg.co.za/article/2008-11-13
-us-doctors-shocked-at-
state-of-zim-health-system
¶8. African Human Rights Commission Berates Zimbabwe… The African
Commission for Human and People’s Rights, meeting in Nigeria,
criticized Zimbabwe for its atrocious human rights record in recent
years, particularly in 2008. It called on the AU and SADC to, “to
impress upon Zimbabwean authorities to take effective measures to
stop all forms of politically motivated violence and allow for free
political activity, including the opening up of space for the media
and civil society…. [and] to remind Zimbabwe of its obligations to
regional and international agreements and its current violation of
the human rights in relation to continued detentions, threats and
gender biased violence.”
¶9. Zim troops in DRC?… The BBC reported that Zimbabwean troops
are in the Democratic Republic of Congo to perform duties that
include guarding mines. See: http://news.bbc.co.uk/2/hi/
africa/7726690.stm
———————————-
On the Economic and Business Front
———————————-
¶10. Air Zimbabwe Demands Fares In Foreign Exchange… In line with
increased dollarization in the country, Air Zimbabwe is no longer
accepting payment for regional and international air fares in
Zimbabwe dollars. Only local routes will be payable in local
currency. The measure is designed to enable Air Zimbabwe to meet
its external debt obligations and to pay for spare parts and other
costs which account for 90 percent of the company’s costs.
¶11. Reserve Bank of Zimbabwe (RBZ) Re-instates RTGS… Typical of
RBZ governor Gideon Gono’s policy flip-flopping in recent years, the
RBZ has re-instated the real time gross settlement (RTGS) system
which was suspended against technical advice from his advisers
barely a month ago. According to the RBZ, all transactions going
through the system must have a minimum threshold of Z$5 billion
(about US$8). Gono advises that commercial banks employ the ‘know
your customer’ principle in order to prevent abuse of the system.
¶12. Cash Withdrawal Limit For Companies Raised and Forex Surrender
Requirements Relaxed… The RBZ stated that companies can now
withdraw cash equivalent to 120 percent of their previous week’s
cash deposits, while foreign exchange licensed shops are now
required to sell only 7.5 percent of their proceeds to the RBZ as
opposed to the current 15 percent. The measures which appear to be a
HARARE 00001025 003 OF 003
direct response to demands y industry are designed to address the
queues at banks and the high prices of goods in foreign exchange
licensed shops.
¶13. Power Utility Stops Accepting Checks For Settlement Of Bills…
The Zimbabwe Electricity Supply Authority (ZESA) has stopped
accepting checks as a form of payment for electricity consumed. The
move, which comes hard on the heels of a steep increase in tariffs
two weeks ago, will make it very hard for consumers to pay as they
are only allowed to withdraw Z$500,000 from the bank daily.
¶14. Zimplats to Cease Open Pit Mining… Zimbabwe’s platinum
producer, Zimplats Holdings, will cease the more expensive open pit
mining at its Ngezi Mine at the end of this month following a
sustained fall in platinum prices from US$2,200 per ton in March
2008 to US$846.89 per ton by November 7, 2008 in Europe. According
to a company report published last week, management is exploring
options to increase the cheaper underground ore production in order
to take advantage of processing capacity that will become available
with the commissioning of the Ngezi Concentrator in April 2009.
MCGEE
(81 VIEWS)
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