Acting Finance Minister Herbert Murerwa was unwilling to help Zimbabweans confront uncomfortable facts leaving everything to central bank governor Gideon Gono.
This was said after Murerwa presented his mid-year budget review for 2004 in which he was said to have offered tax relief by increasing non-taxable income yet all he had done was account for inflation.
Viewing cable 04HARARE1281, Mid-Year Budget Statement Is Nonevent
This record is a partial extract of the original cable. The full text of the original cable is not available.
271334Z Jul 04
UNCLAS HARARE 001281
STATE FOR AF/S
USDOC FOR AMANDA HILLIGAS
TREASURY FOR OREN WYCHE-SHAW
PASS USTR FLORIZELLE LISER
STATE PASS USAID FOR MARJORIE COPSON
¶E. O. 12958: N/A
SUBJECT: Mid-Year Budget Statement Is Nonevent
¶1. Summary: Acting Finance Minister Herbert Murerwa’s mid-
year speech offered neither recognition of Zimbabwe’s
exporter crisis nor innovative prescriptions. Once
again, the beleaguered Finance Ministry has punted the
ball to Reserve Bank Governor Gideon Gono. End summary.
Adjustment for Bracket Creep
¶2. For ordinary Zimbabweans, the only noteworthy aspect
of Murerwa’s statement was his elevation of income tax
brackets, a semiannual ritual in this high-inflation
environment. The GOZ’s Herald led today with this item
under the overextended headline, “Non-Taxable Income Up.”
The GOZ raised the low bracket threshold from Z$ 200,000
to 750,000/month (US$37-140) and the high bracket
threshold from Z$375,000 to 1,500,000/month (US$70-280).
Although Murerwa and the Herald vaguely characterized the
adjustment as tax relief, it merely accounts for
inflationary bracket creep since December. Additionally,
the GOZ tinkered with duty on a few imports, most notably
lowering or removing taxes on commercial or public
transport vehicles. Murerwa made only timid references
to fiscal restraint, probably too little to satisfy the
¶3. Speaking obliquely and often in passive voice, Murerwa
further toed the GOZ line by implying Zimbabwean exports
were increasing (measures “are greatly improving
viability and capacity to export”) and the GOZ was paying
down its arrears to international lending bodies (“some
payments are being made”). Still, Murerwa and the
Finance Ministry professional staff obviously realize a)
inflationary bracket realignment is not tax relief, b)
exports are falling rapidly, and c) recent GOZ payments
to the International Monetary Fund are insignificant.
Yet Murerwa, who has served twice as Finance Minister, is
unwilling to help Zimbabweans confront uncomfortable
facts. We will see if Gono is more up to the task when
he delivers his monetary policy update.