Finance Minister Tendai Biti told former United States ambassador to Zimbabwe James McGee, less than three months after getting into office, that the issue of central bank governor Gideon Gono-which has been touted as one of the burning issues within the Global Political Agreement- was merely academic.
“We have dealt with his mischief,” he told McGee on 8 April 2009.
Biti said Gono could no longer print money. Quasi-fiscal activity had ended. Government accounts were no longer at the Reserve Bank of Zimbabwe but were with commercial banks. Forex surrender requirements had been removed, and foreign currency accounts were now protected from the reach of the RBZ.
Biti also said he was getting a lot of support from President Robert Mugabe adding that the government would not have achieved what it had without him.
Mugabe, he said, had acknowledged the need for investment protections and democratisation, and had accepted that indigenisation needed to be done carefully so as not to deter investment.
Biti said that though he had been reluctant to join the inclusive government he was now fully committed to the new government and was optimistic about its prospects.
He even called on the United States to lift sanctions on Zimbabwe and to vote for International Monetary Fund support for the country.
Viewing cable 09HARARE296, BITI ON THE ECONOMY, SANCTIONS, AND MUGABE
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E.O. 12958: DECL: 04/08/2019
SUBJECT: BITI ON THE ECONOMY, SANCTIONS, AND MUGABE
REF: A. HARARE 278
¶B. HARARE 260
Classified By: Ambassador James D. McGee for reason 1.4 (d)
¶1. (C) The Ambassador, accompanied by visiting Staffdel
Smith, met April 8 with Minister of Finance Tendai Biti.
Biti briefly reviewed the current budgetary situation and
discussed Reserve Bank of Zimbabwe (RBZ) Governor Gideon
Gono, President Robert Mugabe’s role in the new government,
the Zimbabwe Democracy and Economic Recovery Act (ZDERA), the
recent Cabinet retreat, and his upcoming trip to Washigton
for Bretton Woods meetings. END SUMMARY.
On the Budget and Gono
¶2. (C) Biti said the GOZ was only taking in about US$25
million a month in revenues. (NOTE: The recent IMF Mission
estimated that the GOZ took in $30 million in February and
might achieve $50 million in March. END NOTE.) This was
almost enough to pay US$100 civil servant allowances, but
left nothing for recurrent government expenses. He estimated
total monthly expenses at US$100 million. So far, the
government had been using revolving credit from commercial
banks; the banks had been extremely helpful. He added he was
hoping that through “humanitarian plus” assistance,
particularly in the health and education areas, donors could
defray some recurrent GOZ obligations to allow the Ministry
of Finance to focus on civil servant salaries.
¶3. (C) Biti reviewed his accomplishments to date (Ref B),
and said he was trying to comply with suggestions of the IMF
team that recently visited Zimbabwe, including to audit for
ghost civil servant personnel, to institute a workable public
finance management system, and to adopt procedures for the
use of multiple currencies.
¶4. (C) On the hot-button issue of Gono, Biti said this was
academic. “We have dealt with his mischief.” He could no
longer print money, quasi-fiscal activity had ended,
government accounts were no longer at the RBZ, but were with
commercial banks, forex surrender requirements had been
removed, and FCAs (foreign currency accounts) were now
protected from the reach of the RBZ.
Help from Mugabe
¶5. (C) While Biti would not go as far as his colleague,
Minister of Economic Development Elton Mangoma, to say the
MDC hoped Mugabe remains in power for a while (Ref A), he did
say that the new government would not have achieved what it
has without Mugabe. Mugabe had been helpful with his revised
budget (Ref B) and at the recent SADC Summit in Swaziland
where the GOZ was seeking financial assistance. Biti also
noted that Cabinet Secretary in the President’s office Michek
Sibanda (a known hardliner) had sent letters to cabinet
officials ordering efforts to deal with IMF recommendations
and to expedite an audit of ghost workers. Finally, Biti
said he had met the previous day with German businessmen and
Qsaid he had met the previous day with German businessmen and
Mugabe. Mugabe had acknowledged the need for investment
protections and democratization, and had accepted that
indigenization needed to be done carefully so as not to deter
HARARE 00000296 002 OF 002
From Skeptic to Optimist
¶6. (C) Stressing that he had been reluctant to enter into an
agreement with ZANU-PF and enter a new government, Biti said
he was fully committed to the new government and optimistic
about its prospects. Progress had been much more rapid than
he could have imagined. The Cabinet retreat, in his opinion,
had been a huge success with an enhanced sense of
compatibility between ZANU-PF and MDC and a shared commitment
to work on 100-day plans in sectors spanning the work of
government. Biti was particularly impressed that Minister of
Justice Patrick Chinamasa had called for media reform.
Please Repeal ZDERA
¶7. (C) Biti made a plea for the U.S. to repeal ZDERA so the
U.S. could vote for IMF support for Zimbabwe. He also argued
that ZDERA was impeding Zimbabwean banks in their
Looking Forward to Washington
¶8. (C) Biti said his agenda in Washington, where he will
attend the spring IMF/World Bank meetings, was to meet with
high-level officials at the State Department, to request
technical assistance, to meet with Paris Club officials, and
to ask for consideration of the repeal of ZDERA.
¶9. (C) There is a pervasive sense of a “Harare Spring,” and
it is impressive that a long-time skeptic such as Biti is so
optimistic. Nevertheless, given the history of Mugabe and
ZANU-PF, a note of caution is certainly warranted. We
continue to believe that we should look for ways of helping
this transitional government without providing sustenance to
ZANU-PF. We should also look closely to see if important
near-term benchmarks, such as media reform and the beginning
of the constitutional process, are attained. END COMMENT.