Gono said Mugabe was amenable when approached in a proper manner

Central bank governor Gideon Gono told United States ambassador to Zimbabwe Christopher Dell that President Robert Mugabe was amenable when approached in a proper manner.

He was talking pursuing closer ties with the International Monetary Fund and said he had arranged a meeting between Mugabe and IMF managing director Rodrigo Rato.

The first meeting which he had scheduled for Ouagadougou had failed because of “bureaucrats” in the President’s office. He had set up another meeting in New York and threatened to resign if this meeting did not take place.

Gono said his priorities were to reduce inflation, reassert regulatory authority over the financial sector, eliminate remaining price controls, draw business activity from the informal to formal sector, make quarterly instead of semi-annual monetary policy statements and introduce “controlled” foreign exchange currency auctions.

He believed that he was gradually succeeding at each of these goals.

Full cable:

Viewing cable 04HARARE1598, AMBASSADOR’S INITIAL CALL ON RBZ GOVERNOR GONO

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This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 02 HARARE 001598

SIPDIS

AF/S FOR BNEULING

NSC FOR SENIOR AFRICA DIRECTOR C. COURVELLE, D. TEITELBAUM

USDOC FOR AMANDA HILLIGAS, TREASURY FOR OREN WYCHE-SHAW,

PASS USTR FOR FLORIZELLE LISER, STATE PASS USAID FOR

MARJORIE COPSON

E.O. 12958: DECL: 12/31/2009

TAGS: ECON ETRD PGOV ZI EINV

SUBJECT: AMBASSADOR’S INITIAL CALL ON RBZ GOVERNOR GONO

Classified By: Ambassador Christopher Dell for reason 1.5 d

Summary

——-

¶1. (C) Reserve Bank Governor (RBZ) Governor Gideon Gono told

Ambassador Dell that he is pursuing closer ties with the

International Monetary Fund (IMF) by boosting arrears

payments, trying to facilitate a meeting between President

Mugabe and IMF Managing Director Rodrigo Rato and arranging

for an IMF technical visit Nov 17-23. Gono argued that he

has begun to revive the economy in nearly ten months on the

job by attacking inflation and taking other measures.

Despite criticisms, he indicated he would continue to

intervene in policies outside traditional central banker

duties, such as modifying the NGO bill and bringing together

hostile groups.

Gono Courts the IMF

——————-

¶2. (C) During the Ambassador’s initial visit to the Reserve

Bank, Gono insisted he wanted Zimbabwe to reengage with

Western countries and international lending institutions.

Arguing that President Mugabe was “amenable when approached

in the proper way,” Gono claimed to have worked hard to

successfully convince Mugabe to meet IMF Managing Director

Rato. Mugabe was to have met Rato during the Sept 8-9

African Union Extraordinary Summit in Ouagadougou. However,

miscommunication, which he blamed on &bureaucrats8 in the

President,s office, caused the Ouagadougou meeting to fall

through. Gono said he had threatened to resign if a

Mugabe-Rato meeting did not take place during the opening of

the 59th United Nations General Assembly in New York. He

said the meeting had been agreed for September 20 but he had

yet to get a readout or even confirmation that it had

occurred.

¶3. (C) Gono said he has made tentative arrangements for an

IMF delegation to visit Harare Nov 17-23. He said he had

persuaded acting Finance Minister Herbert Murerwa to move

forward his 2005 budget presentation to Parliament by one

week to Nov 18, which will enable the IMF delegation to

review next year’s budget during the visit. Although Gono

has now increased Zimbabwe’s quarterly arrears payments to

the IMF to US$5 million, he complained that the IMF’s

decision to close its Harare office had enabled adversaries

to claim his reengagement efforts were failing.

Steps to Revive Economy

———————–

¶4. (C) After recounting familiar GOZ policy that brought

about Zimbabwe’s economic collapse – unbudgeted payouts to

“War Veterans” in 1997, the beginning of intervention in the

Democratic Republic of the Congo in 1998, etc. – Gono

summarized his objectives since taking office Dec 1, 2003.

Above all, the Central Banker said he has sought to reduce

inflation, which peaked at a monthly 33 percent last November

and is now below 10 percent. Gono added that he wanted to

reassert regulatory authority over the financial sector,

eliminate remaining price controls, draw business activity

from the informal to formal sector, make quarterly instead of

semi-annual monetary policy statements and introduce

“controlled” foreign exchange currency auctions. He believes

he is gradually succeeding at each of these goals and pointed

out that 2004 gold exports had already surpassed 16 tons, up

from 12 tons during all of 2003.

Zimbabwe’s Central Banker Plus

——————————

¶4. (C) Insisting that Zimbabwean politics and economics are

inextricably linked, Gono said “I make no apology” for

intervening in GOZ matters unrelated to monetary policy. In

that spirit, Gono argued he was trying to tone down the

restrictive NGO bill. Gono said he has used his Foreign

Exchange Auction Advisory Board to promote dialogue among

such diverse groups as the Commercial Farmers Union, War

Veterans and National Association of Non-Governmental

Organizations. (N.B. The opposition Movement for Democratic

Change and independent Zimbabwe Congress of Trade Unions have

refused to participate on the Board.) Regarding Zimbabwe’s

besieged white farmers, Gono said he wanted to be able to

tell them “to get on with their work.”

Comment

¶5. (C) Gono seeks rapprochement with the West because he

wants balance-of-payments support to underwrite economic

restructuring. IN that regard, his views echoed similar

remarks we have heard from the local business community which

believes balance-of-payments support from the International

Financial Institutions (IFIs) is their only hope for

recovery. Neither Gono nor the businessmen were willing to

acknowledge that questions of improved governance and respect

for democratic principles were the sine quo non of a revived

relationship with the IFIs. For that reason, he has become

the GOZ’s designated reengagement advocate and barbarian

handler par excellence. Yet although President Mugabe has

granted Gono wider latitude than predecessor Leonard Tsumba,

Gono has been unable to prevail upon Mugabe to lessen

repressive tactics against the opposition, independent press,

remaining white farmers and NGOs – or even more pertinent to

his principal responsibilities, to wean the GOZ off its

overvalued exchange rate and the harsh administrative

controls used to maintain it.

Dell

(35 VIEWS)