Biti says the government is broke

Finance Minister Tendai Biti told United States ambassador to Zimbabwe James McGhee that the government was broke. It was spending about US$100 million a month but was only earning US$11 million a month.

The ambassador had paid a courtesy call on the new minister 12 days after he had assumed office.

Biti explained his short-term economic recovery programme to the ambassador and said he needed bridging funds for at least three to six months.

The ambassador pledged to continue humanitarian assistance but said the United States might suspend food aid if a United States Agency for International Development driver Frank Muchirahondo was not released.

Muchirahondo was arrested in connection with the attempted assassination of Air Force chief Perrence Shiri.

Full cable:

Viewing cable 09HARARE144, AMBASSADOR CALLS ON ZIM MINISTER OF FINANCE BITI

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E.O. 12958: DECL: 02/23/2019

TAGS: PGOV PREL ASEC PHUM EAID ECON ZI

SUBJECT: AMBASSADOR CALLS ON ZIM MINISTER OF FINANCE BITI

REF: HARARE 135

Classified By: Ambassador James D. McGee for reason 1.4 (b) and (d)

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SUMMARY

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¶1. (C) The Ambassador paid a courtesy call today on new

Minister of Finance Tendai Biti. Bti outlined his plan for

short-term economic recovery, but expressed concern about

funding recurrent government expenditures over the next

several months while the economy stabilizes. He acknowledged

that political progress, particularly the release of

detainees, would be necessary for donors to reengage. The

Ambassador pledged to continue humanitarian assistance, but

alerted Biti that the U.S. would consider a suspension of

such assistance if USAID employee Frank Muchirahondo was not

soon released. END SUMMARY.

———–

We’re Broke

———–

¶2. (C) Biti began the discussion by stating that the GOZ was

broke, but that there was light at the end of the tunnel. He

sketched out his Short-Term Emergency Plan (STEP) that he

presented in detail to donors last week (Ref).   So far, the

plan which will be presented to Cabinet tomorrow had not met

with resistance from ZANU-PF. Elaborating on his discussion

with the donors, Biti said he had determined that legally

proceeds from mineral sales should not be handled by the

Reserve Bank of Zimbabwe (RBZ) as had been the custom;

henceforth proceeds would go directly to the Ministry of

Finance.

¶3. (C) As he had with the donors (Ref) Biti discussed what

he considered critical bridge funding for the next three to

six months until the government is financially viable.

Recurrent expenditures are about US$ 100 million; revenues

are about US$ 11 million. Expenditures are broken down as

follows in US$:

–$50 million: civil servant salaries

–$10 million: dollarized pensions

–$15 million: drugs and health services

–$15 million: government supplies

–$10 million: urban sanitation and water services

–$10 million: short-term assistance to local authorities.

¶4. (C) Biti said the government had paid civil servants

US$100 for February. He had used cash on hand and borrowed

from financial institutions. Looking ahead to March and

beyond, and taking into account a bloated government with 61

ministers and deputy ministers and 10 governors, he commented

that US$100 million might not be enough, particularly if

civil servants demanded more than US$100 per month. Biti

stated he had discussed assistance with South Africa and

intended to talk to the governments of Botswana and Angola

for short-term assistance.

—————

U.S. Assistance

—————

¶5. (C) The Ambassador responded by noting U.S. legal

limitations on developmental and budgetary assistance. He

stated that the U.S. wanted the government to succeed and

that the USG would continue to provide humanitarian

assistance. The Ambassador caveated, however, that he would

raise the issue with Washington of a suspension of food

Qraise the issue with Washington of a suspension of food

HARARE 00000144 002 OF 002

assistance while USAID employee Frank Muchirahondo remained

in custody. Biti replied he understood the implications of

continued political detentions. Failure to resolve this

issue was sending mixed signals to the EU, the U.S. and

regional countries who saw a new government, but one with

serious human rights issues unaddressed. He had talked to

Prime Minister Tsvangirai about this earlier in the morning,

and Tsvangirai was going to raise the issue of political

detainees with President Mugabe at a meeting later in the day.

———————-

International Outreach

———————-

¶6. (C) Biti said he and his team would attend the “Changes”

conference in Dar es Salaam on March 10-11 sponsored by the

IMF and the Government of Tanzania. They also planned to

attend the IMF-World Bank meetings in Washington, D.C. in

April.

——-

COMMENT

——-

¶7. (C) After years of sclerotic government, the MDC is

trying to move fast in MDC-controlled ministries such as

Finance by enlisting the help of capable civil servants who

have weathered the bad times, and by ignoring ZANU-PF. So

far, ZANU-PF has offered little resistance, according to

Biti. His major problem–and one on which he said he is

spending considerable time–is to secure funding for

recurrent expenditures until donor assistance begins and the

economy begins to rebound. The task is complicated by the

failure of ZANU-PF to cooperate in visible steps such as the

release of detainees. END COMMENT.

MCGEE

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