Biti’s budget woes

Finance Minister Tendai Biti told diplomats in October 2009 that though government revenue had risen to US$90 million a month, 20 times more than his ministry had been getting when he assumed office, it still fell short of government spending.

He wanted to increase the salary of civil servants from US$150 to US$200, for example, but this would eat up two-thirds of the budget.

Full cable:

Viewing cable 09HARARE851, ZIM NOTES 10-23-2009

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DE RUEHSB #0851/01 3001456

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R 271456Z OCT 09

FM AMEMBASSY HARARE

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INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE

RUEHAR/AMEMBASSY ACCRA 3112

RUEHDS/AMEMBASSY ADDIS ABABA 3225

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RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK

RHEHAAA/NSC WASHDC

UNCLAS SECTION 01 OF 02 HARARE 000851

AF/S FOR B. WALCH

ADDIS ABABA FOR USAU

ADDIS ABABA FOR ACSS

NSC FOR SENIOR AFRICA DIRECTOR

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

COMMERCE FOR ROBERT TELCHIN

SIPDIS

E.O.12958: N/A

TAGS: PGOV PREL ASEC PHUM ECON ZI

SUBJECT: ZIM NOTES 10-23-2009

———–

¶1. SUMMARY

———–

Topics of the week:

– Tsvangirai Lobbies Key SADC Members

– As Mugabe Holds Cabinet Meeting in his Absence

– Rural Residents Fear Renewed Violence

– Cholera Season Begins in Zimbabwe

– AG Tomana Takes Over Bennett’s Case

– Manufacturing Sector Improving but Problems Remain

– Companies Consolidate as Cash Crunch Bites

– Biti’s Budget Woes

———————————

On the Political and Social Front

———————————-

¶2. Tsvangirai Lobbies Key SADC Members…After “disengaging” from

ZANU-PF, PM Morgan Tsvangirai this week met with South African

President Jacob Zuma, Mozambican President Armando Guebuzza,

Congolese President Joseph Kabila, and planned to meet with

President Eduardo Dos Santos of Angola on Friday. The whirlwind

tour is an effort to lobby SADC to to pressure President Robert

Mugabe and SADC to comply with the Global Political Agreement.

Specifically, the MDC wants Mugabe to appoint MDC governors, rescind

the appointments of RBZ governor Gideon Gono and Attorney General

Johannes Tomana, and to swear in Roy Bennett as Deputy Minister of

Agriculture. Tsvangirai is expected to return to Harare today and

to meet with Mugabe on Monday. The SADC Troika heads of state, as

well as well as a representative of South Africa, the GPA

facilitator, will meet with principals (Mugabe, Tsvangirai, and

Arthur Mutambara) and GPA negotiators on October 29 in Harare. See

Harare 843.

¶3. As Mugabe Holds Cabinet Meeting in his Absence… On October 20,

President Robert Mugabe chaired a cabinet meeting attended by his

party and MDC-M ministers. MDC boycotted and held its own “cabinet”

meeting at MDC-T party headquarters.

¶4. Rural Residents Fear Renewed Violence… Post conducted site

visits to rural communities across five different provinces and

determined that though current levels of non-farm related political

violence are low, residents still live in fear of ZANU-PF directed

violence. That fear stems from concerns that ZANU-PF has maintained

its capacity to deliver a campaign of violence through ZANU-PF

youth, war veterans and the military. Elements of these

organizations continue to circulate in rural communities, and in

some instances have increased their activities. See Harare 839.

Government officials have told us that as many as 25,000 youths are

on the payroll without specific jobs; many are engaged in

intimidation of MDC supporters.

¶5. Cholera Season Begins in Zimbabwe… According to the World

Health Organization, as of October 17, 2009, 72 cases of cholera and

3 deaths have been verified nationwide. About half of the cases are

in Chipinge District in Manicaland province, but there are also a

few cases in Harare (5 cases from Mabvuku), Midlands (19),

Mashonaland Central (1), and Mashonaland West (18). The cholera

season in Zimbabwe runs roughly from October to April, and more

cases are expected once the seasonal rains begin in late November or

Qcases are expected once the seasonal rains begin in late November or

December. The incidence to date is not above the norm and is not

expected to be as high as last year because of the intensity with

which the donor community has supported hygiene education.

¶6. AG Tomana Takes Over Bennett’s Case… On October 19, Attorney

General Johannes Tomana personally took over prosecution of Roy

Bennett from the two senior officers who had been handling the case.

HARARE 00000851 002.2 OF 002

Tomana, who has made no secret of his ZANU-PF partisanship,

defended the move by saying Bennett was a “national security threat”

and that he had intervened to expedite the trial. Bennett’s trial

on banditry, sabotage and terrorism charges is expected to begin in

Harare’s High Court on November 9. In the meantime, he remains out

on bail.

———————————–

On the Economic and Business Front

———————————-

¶7. Manufacturing Sector Improving but Problems Remain… According

to the 2009 manufacturing sector survey, firms have started to

increase capacity utilization from around 10 percent in the first

six months of 2007 to over 30 percent during the corresponding

period of 2009. However, constraints such as a shortage of imported

inputs, lack of credit, and high production costs continue to limit

the pace of recovery. Although most firms recorded increases in

output, only 9.5 percent of respondents were optimistic about the

future.

¶8. Companies Consolidate as Cash Crunch Bites… Cash-rich beverage

manufacturer, DELTA Corporation, is increasing its stake in wines

and spirits producer, African Distillers, from about 30 percent to

just over 50 percent. According to an October 22 report in the

Financial Gazette, the move is part of Delta’s strategy to

reconfigure its strategic model and concentrate on its core

business. Separately, Kingdom Meikles subsidiary Cotton Printers

filed for voluntary liquidation due to bankruptcy brought about by

insufficient capitalization. This follows hard on the heels of a

similar move by Zimbabwean textile manufacturer, David Whitehead.

¶9. Biti’s Budget Woes… Finance Minister Tendai Biti briefed

diplomats this week and said revenue was still flat at about $90

million per month. While this is about 20 times more than the

Ministry of Finance was taking in at the beginning of the year, it

still falls far short of what Biti thinks the GOZ should be

spending. For instance, Biti would like to raise monthly

civil-service wages from $155 to $200, but this would eat up two

thirds of the budget. Under the tight constraints of his cash

budget, Biti has reluctantly agreed to use $200 million of

Zimbabwe’s new allocation of IMF special drawing rights to fund

infrastructure projects, renovation of public utilities, and lines

of credit for the private sector. A further $140 million in SDRs

would be set aside to clear Zimbabwe’s arrears with the IMF.

—————–

Quote of the Week

—————–

¶10. “If this Global Political Agreement is to collapse I would say

to Robert Mugabe, you are not the President of Zimbabwe. You are an

illegitimate leader.” Deputy Prime Minister Arthur Mutambara

(MDC-M), quoted in The Zimbabwe Times on October 20.

PETTERSON

(13 VIEWS)