Gono says he is prepared to interfere in any sector

Central bank governor Gideon Gono said he was prepared to interfere in any sector for the sake of Zimbabwe’s economic health.

This was generally interpreted to mean selectively chasing down corruption. He appeared to be turning from the financial to the insurance sector.

He said the central bank would continue to allow anyone to sell foreign exchange through authorised banks at the auction rate but would investigate sales of US$10 000 or more.

Gono expressed fear that exporters would under-invoice clients abroad to dodge Zimbabwe’s 25 percent retention requirement, then exchange proceeds in anonymous cash transactions.

He continued to pin hopes on tapping into transfers from Zimbabweans abroad; claiming that one-third of the population had emigrated.

He said that foreign exchange redemptions were about US$1.5 million per day in the first days of the no-questions-asked policy.

Full cable:

Viewing cable 04HARARE767, RBZ Governor Addresses U.S. Firms

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

UNCLAS HARARE 000767

SIPDIS

SENSITIVE

STATE FOR AF/S

NSC FOR SENIOR AFRICA DIRECTOR JFRAZER

USDOC FOR AMANDA HILLIGAS

TREASURY FOR OREN WYCHE-SHAW

PASS USTR FLORIZELLE LISER

STATE PASS USAID FOR MARJORIE COPSON

¶E. O. 12958: N/A

TAGS: ECON EAID BTIO EINV PGOV PTER ZI

SUBJECT: RBZ Governor Addresses U.S. Firms

Ref: Harare 682

¶1. (U) Summary: Reserve Bank (RBZ) Governor Gideon Gono

met May 6 with 30 representatives from U.S.

multinationals. He offered few insights beyond his April

21 policy statement, but underscored RBZ vigilance in

policing commercial activity. End Summary.

¶2. (U) In this session organized by the American Business

Association of Zimbabwe, Gono said the following to U.S.

companies:

– He will need to make more frequent policy statements

than the two-per-year that had become typical under his

predecessor. (April’s address followed his first by only

four months.)

– Gono is prepared to interfere in any sector for the

sake of Zimbabwe’s economic health. This generally means

selectively chasing down corruption. He appears to be

turning from the financial to insurance sector.

– The RBZ will continue to allow anyone to sell foreign

exchange through authorized banks at the auction (or

floor) rate. However, the RBZ will investigate sales of

US$10,000 or more. Gono expressed fear exporters would

under-invoice clients abroad to dodge Zimbabwe’s 25

percent retention requirement, then exchange proceeds in

anonymous cash transactions. The governor also raised

concerns about money laundering to finance terror or

other nefarious activity.

– Gono continues to pin hopes on tapping into transfers

from Zimbabweans abroad, claiming one-third of the

population has emigrated. He stated that foreign

exchange redemptions were about US$1.5 million per day in

the first days of the no-questions-asked policy.

– Once forex inflows improve, Gono would like to offer

more than US$8 million at twice-weekly auctions. For the

time-being, the RBZ would continue to direct “inflows to

priority sectors.”

– The RBZ governor reiterated his desire to restore

relations with the international community, especially

the International Monetary Fund. He expressed gratitude

for U.S. food and HIV/AIDS assistance.

– He praised the African Growth and Opportunity Act

(AGOA), explaining he had been following AGOA since its

embryonic beginnings in 1997. (Note: In recent months,

Post has made a concerted effort to raise the profile of

AGOA, making Zimbabweans aware of what they are missing

out on.)

¶3. (SBU) In private conversations with the Ambassador,

Gono claimed not to know of the GOZ cabinet decision two

days prior to cancel an FAO crop assessment and said that

he knew the likely maize crop was closer to 800,000

metric tones than the 1.7 million claimed by the

Agriculture Minister. He also padded his reputation as

all-purpose fix-it man by claiming to have intervened

successfully against the Ministry of Education’s shutdown

of many private schools due to unapproved fee hikes.

Further, he said he was considering an appeal by Vice

President Msika to secure presidential intervention

against the Government’s seizure of Kondozi Farm (ref).

Comment

——-

¶4. (U) The GOZ is still fighting market forces,

particularly on currency exchange. Unwilling to face

market realities, it shut several dozen private schools

this week over increased fees. The GOZ’s predisposition

to dictate rates and prices to the private sector still

makes an economic rebound unlikely.

Sullivan

(43 VIEWS)