Central bank governor Gideon Gono was in March 2007 forced to go the streets for money after South African banks refused to give him credit to finance food imports, his advisor Munyaradzi Kereke told United States embassy officials.
Kereke said Zimbabwe had a shortfall of US$1.1 billion and had produced only 650 000 tonnes of maize, less than half the national requirement.
He said Gono was forced to print money and go to the streets to buy foreign currency pushing the parallel market rate from Z$8 000 to Z$20 0000 in just three weeks.
Full cable:
Viewing cable 07HARARE239, ZIMBABWE’S CENTRAL BANK DESPERATELY TRYING TO
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Reference ID |
Created |
Released |
Classification |
Origin |
VZCZCXRO2526
PP RUEHMR RUEHRN
DE RUEHSB #0239/01 0811423
ZNY CCCCC ZZH
P 221423Z MAR 07
FM AMEMBASSY HARARE
TO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 1284
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHUJA/AMEMBASSY ABUJA 1534
RUEHAR/AMEMBASSY ACCRA 1392
RUEHDS/AMEMBASSY ADDIS ABABA 1538
RUEHBY/AMEMBASSY CANBERRA 0800
RUEHDK/AMEMBASSY DAKAR 1164
RUEHKM/AMEMBASSY KAMPALA 1593
RUEHNR/AMEMBASSY NAIROBI 3997
RUEHFR/AMEMBASSY PARIS 1363
RUEHRO/AMEMBASSY ROME 2021
RUEHBS/USEU BRUSSELS
RUEHGV/USMISSION GENEVA 0663
RHEHAAA/NSC WASHDC
RUCNDT/USMISSION USUN NEW YORK 1755
RUEKJCS/JOINT STAFF WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEFDIA/DIA WASHDC//DHO-7//
RUCPDOC/DEPT OF COMMERCE WASHDC
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK//DOOC/ECMO/CC/DAO/DOB/DOI//
RUEPGBA/CDR USEUCOM INTEL VAIHINGEN GE//ECJ23-CH/ECJ5M//
C O N F I D E N T I A L SECTION 01 OF 02 HARARE 000239
SIPDIS
SIPDIS
AF/S FOR S. HILL
NSC FOR SENIOR AFRICA DIRECTOR B. PITTMAN
STATE PASS TO USAID FOR M. COPSON AND E.LOKEN
TREASURY FOR J. RALYEA AND T.RAND
COMMERCE FOR BECKY ERKUL
ADDIS ABABA FOR USAU
ADDIS ABABA FOR ACSS
E.O. 12958: DECL: 01/12/2016
SUBJECT: ZIMBABWE’S CENTRAL BANK DESPERATELY TRYING TO
FINANCE GRAIN IMPORTS
REF: A. HARARE 200
¶B. HARARE 195
¶C. HARARE 172
Classified By: Ambassador Christopher Dell under Section 1.4 b/d
——-
Summary
——-
¶1. (C) According to a senior official at the Reserve Bank of
Zimbabwe (RBZ), Zimbabwe will likely produce less than half
the country’s maize requirements. South African banks were
reluctant to lend to the GOZ the forex needed to finance
imports so the RBZ has turned to the street, fuelling rapid
depreciation of the currency. The RBZ official asked for
U.S. assistance while acknowledging that the GOZ had shot
itself in the foot by beating opposition politicians. End
Summary.
———————————
GOZ in Desperate Search for Grain
———————————
¶2. (C) Munyaradzi Kereke, Senior Advisor to RBZ Governor
Gideon Gono, told econoff on March 16 that Zimbabwe would
likely produce only 650,000-700,000 MT maize this year, less
than half the country’s requirement (Ref A). Kereke said
Governor Gono had gone to South Africa, desperately trying to
negotiate bank loans to finance maize imports. However, the
banks were skeptical of Zimbabwe’s capacity to service any
debt and reluctant to lend.
¶3. (C) Kereke implored the USG to assist Zimbabwe with grain
but confessed that the GOZ had “shot itself in the foot –
with a bazooka” in its recent reaction to opposition protests
(Ref B). He hoped the international community would assist
Zimbabwe regardless and noted that the Zimbabwean people were
angry and hungry, and more likely than ever to take their
demands to the street.
———
And Forex
———
¶4. (C) Kereke admitted that Gono’s failure in South Africa
had put the government under intense pressure to acquire the
foreign exchange needed to pay for the imports. He
fleetingly showed a paper dated March 14, prepared by the RBZ
for Mugabe, on “Foreign Exchange Requirements and Alternate
Sources of Revenue.” It put Zimbabwe’s current forex
shortfall at US$1.1 billion.
¶5. (C) In response, the RBZ has launched a major effort to
acquire needed forex from the parallel market by printing
Zimbabwe dollars. The RBZ’s efforts are a primary reason the
street price of the Zimbabwe dollar has gone from Z$8,000:USD
to Z$20,000:USD in just three weeks (the official exchange
rate remains fixed at Z$250:USD.) The RBZ has also
reportedly zeroed in on the mining sector as a source of
HARARE 00000239 002 OF 002
foreign exchange. Zimplats CEO Greg Sebborn told us his
company has come under pressure from Kereke to sell its
offshore-held foreign exchange (Ref C) to the Bank to finance
a “special grain import program.”
——-
Comment
——-
¶6. (C) The GOZ is in a state of absolute denial if it thinks
the international community is going to bail it out of its
economic bind with food assistance while it is busy
threatening western diplomats and physically abusing
opposition politicians. As we said in Ref A, we need to
provide food aid directly to those areas hardest hit rather
than through the government’s distribution system.
SCHULTZ
(29 VIEWS)
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