US embassy disagrees with IMF sides with Biti

The United States embassy in Harare did not agree with the conclusion of an International Monetary Fund mission to Zimbabwe that the government’s income estimate for 2009 was overly optimistic saying in light of the gaping lack of information on private sector activity and its capacity to rebound, it believed Finance Minister Tendai Biti’s revised budget broadly reflected actual government incomes and expenditures.

The embassy said the budget was in compliance with the United States’ Department of State Foreign Operations and Related Programmes Appropriation Act under which Zimbabwe was receiving foreign assistance in the 2009 financial year.

It said the appointment of Biti had paved the way for a more realistic budget where expenditure matched revenue and he had prohibited off-budget spending.

Biti had also seized traditional finance ministry powers from the governor of the central bank Gideon Gono who had mismanaged public funds in the past years.

Full cable:

Viewing cable 09HARARE289, IMPROVED BUDGET TRANSPARENCY IN ZIMBABWE

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VZCZCXRO0686

PP RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN

DE RUEHSB #0289 0961547

ZNR UUUUU ZZH

P 061547Z APR 09

FM AMEMBASSY HARARE

TO RUEHC/SECSTATE WASHDC PRIORITY 4338

INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE

RUEHUJA/AMEMBASSY ABUJA 2265

RUEHAR/AMEMBASSY ACCRA 2766

RUEHDS/AMEMBASSY ADDIS ABABA 2888

RUEHBY/AMEMBASSY CANBERRA 2153

RUEHDK/AMEMBASSY DAKAR 2509

RUEHKM/AMEMBASSY KAMPALA 2936

RUEHNR/AMEMBASSY NAIROBI 5377

RUEAIIA/CIA WASHDC

RUEHGV/USMISSION GENEVA 2055

RHEHAAA/NSC WASHDC

RHMFISS/JOINT STAFF WASHDC

RUEHC/DEPT OF LABOR WASHDC

RUEATRS/DEPT OF TREASURY WASHDC

RHEFDIA/DIA WASHDC

RUCPDOC/DEPT OF COMMERCE WASHDC

RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK

RUZEHAA/CDR USEUCOM INTEL VAIHINGEN GE

UNCLAS HARARE 000289

SENSITIVE

SIPDIS

AF/S FOR B. WALCH

AF/EPS FOR ANN BREITER

EEB/IFD/OMA FOR JULIA JACOBY

NSC FOR SENIOR AFRICA DIRECTOR

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

TREASURY FOR D. PETERS

COMMERCE FOR ROBERT TELCHIN

ADDIS ABABA FOR USAU

ADDIS ABABA FOR ACSS

E.O. 12958: N/A

TAGS: EAID ECON PREL EFIN PGOV ZI

SUBJECT: IMPROVED BUDGET TRANSPARENCY IN ZIMBABWE

REF: A. SECSTATE 28885

¶B. HARARE 0260

¶C. HARARE 232

¶1. (U) The Government of Zimbabwe is a recipient of FY09

foreign assistance, as defined in Ref A, under the Department

of State Foreign Operations and Related Programs

Appropriations Act (SFOAA). Post therefore provides the

following response to the questions contained in Ref A.

¶2. (U) The Government of Zimbabwe’s budget is publicly

available, and incomes and expenditures are included in the

budget.

¶3. (SBU) The formation of an inclusive government in

February, 2009 and the appointment of Tendai Biti of the

Movement for Democratic Change (MDC), which had been the

opposition party, as Minister of Finance, paved the way for

the introduction of a revised and considerably more realistic

FY09 budget. Soon after taking office, Biti introduced a

cash budget (Ref B), i.e. expenditures match revenue, and he

prohibited off-budget spending. He also seized back

traditional finance ministry powers from the Governor of the

Reserve Bank of Zimbabwe, who had mismanaged public finance

in the past years.

¶4. (SBU) A recent IMF mission to Zimbabwe concluded that the

Government’s income estimate for FY09 was overly optimistic

(Ref C). In light of the gaping lack of information on

private sector activity and its capacity to rebound, we

nevertheless believe that the budget broadly reflects actual

government incomes and expenditures in this first year of

economic recovery in Zimbabwe in over a decade, and that the

budget is therefore in compliance with Section 7088(c) of the

SFOAA.

MCGEE

(31 VIEWS)