Biti said Gono issue was just academic

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.

Full cable:

Viewing cable 09HARARE296, BITI ON THE ECONOMY, SANCTIONS, AND MUGABE

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C O N F I D E N T I A L SECTION 01 OF 02 HARARE 000296

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STATE PASS TO USAID FOR J. HARMON AND L. DOBBINS

E.O. 12958: DECL: 04/08/2019

TAGS: PGOV EFIN PHUM PREL ASEC ZI

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)

——-

SUMMARY

——-

¶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

investment.

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

international payments.

—————————–

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.

——-

COMMENT

——-

¶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.

MCGEE

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