The United States embassy hosted a reception for an International Monetary Fund mission team, barely a month after the swearing in of the inclusive government, and tried to dictate to the team what was wrong with Zimbabwe.
US ambassador to Zimbabwe James McGee briefed the team on 8 March 2009 on the lack of political will among top ZANU-PF officials to make the three-week-old inclusive government work.
He also briefed the team on the incompetence and corruption of central bank governor Gideon Gono, stressing that the donor community’s opinion was that Gono must go before donor support could flow.
Full cable:
Viewing cable 09HARARE204, DONORS BRIEF IMF TEAM ON EVE OF MEETINGS WITH ZIM
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Reference ID |
Created |
Released |
Classification |
Origin |
VZCZCXRO5341
PP RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0204/01 0691535
ZNR UUUUU ZZH
P 101535Z MAR 09
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC PRIORITY 4157
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 2225
RUEHAR/AMEMBASSY ACCRA 2685
RUEHDS/AMEMBASSY ADDIS ABABA 2806
RUEHBY/AMEMBASSY CANBERRA 2074
RUEHDK/AMEMBASSY DAKAR 2430
RUEHKM/AMEMBASSY KAMPALA 2854
RUEHNR/AMEMBASSY NAIROBI 5282
RUEAIIA/CIA WASHDC
RUEHGV/USMISSION GENEVA 1975
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 SECTION 01 OF 02 HARARE 000204
SENSITIVE
SIPDIS
AF/S FOR B. WALCH
AF/EPS FOR ANN BREITER
NSC FOR SENIOR AFRICA DIRECTOR MICHELLE GAVIN
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
SUBJECT: DONORS BRIEF IMF TEAM ON EVE OF MEETINGS WITH ZIM
GOVERNMENT
——-
SUMMARY
——-
¶1. (SBU) On March 8, Ambassador McGee and key like-minded
ambassadors briefed the IMF Article IV mission team on the
lack of political will to make the inclusive government work
among top ZANU-PF officials, the dire state of Zimbabwe’s
public finances, and the incompetence and corruption of
Reserve Bank Governor Gideon Gono. Post is facilitating
meetings for the IMF mission with industry leaders to ensure
it is well informed of business conditions here. In
addition, we encouraged the mission to issue a press
statement with its recommendations at the conclusion of the
visit. END SUMMARY.
——————————————— —
Donor Ambassadors Brief IMF Mission Upon Arrival
——————————————— —
¶2. (SBU) On March 8, Ambassador McGee hosted a reception for
the IMF Article IV mission to brief the IMF’s new Zimbabwe
team on the political and economic situation in the country.
The IMF mission will conduct meetings with GOZ officials and
the business and donor communities in Harare from March 9-25.
Joined by EU Ambassador Xavier Marchal, German Ambassador
Albrecht Conze, Canadian Ambassador Barbara Richardson,
UK/DFID Economic Advisor Stuart Tibbs, DCM, USAID Director
and Econoff, Ambassador McGee told the mission that top
ZANU-PF officials lacked the political will to make the
government of national unity work. He also impressed upon
the mission the dire state of Zimbabwe’s public finances.
Concerned that the IMF might tolerate Gideon Gono remaining
Governor of the Reserve Bank of Zimbabwe (RBZ), the
ambassadors reiterated the donor community’s opinion that
Gono must go before donor support could flow. Ambassador
McGee also shared with the mission the donor community’s five
principles of re-engagement and examples of benchmarks for
operationalization of the principles.
———————–
Filling the Revenue Gap
———————–
¶3. (SBU) Cognizant of the steep shortfall in revenue and the
GOZ’s ambitious commitment to pay civil servants in foreign
exchange, mission chief Vitalyi Kramarenko pressed the
diplomats for suggestions of possible new revenue sources for
the government, suggesting increased taxation of the wealthy,
perhaps including higher property taxes. DFID’s Tibbs
pointed out the tiny size of the formal economy and the
government,s dependence, for now at least, on VAT returns
for tax revenue. Ambassador McGee commented that most of the
new personal wealth in Zimbabwe was derived from informal or
illicit activities. Ambassador Richardson related that
Canada,s two gold companies in Zimbabwe planned to increase
production now that the gold price had been freed. She said
Qproduction now that the gold price had been freed. She said
the current high world gold price could contribute to tax
revenues, but not immediately.
——————————————— –
Enhanced Humanitarian and Technical Assistance
——————————————— –
HARARE 00000204 002 OF 002
¶4. (SBU) Regarding the acute need for budget support, in
particular to pay school teachers, Tibbs expressed the UK
government’s concern that enhanced humanitarian assistance of
this type lacked an “exit strategy.” He said his government
also feared that ZANU-PF could perceive the assistance as
donor willingness to provide immediate support regardless of
progres on the principles of re-engagement. On the dire
need for technical assistance (TA) to the ministries,
especially the Ministry of Finance, Kramarenko said the IMF
was prohibited from providing TA to Zimbabwe at the moment,
but staff could consider seeking a one-time exception from
the IMF Board. In any case, it would cover no more than 1-2
experts.
¶5. (SBU) Ambassador McGee welcomed news that Sharmini Coorey,
former mission chief to Zimbabwe, would join the mission for
its final three days in Harare. The mission will meet again
with the like-minded donor group on March 16 and give a “Week
One” status report. In addition, it has sought and received
Post’s assistance in arranging meetings with industry leaders
in banking, agriculture, and accountancy. Post has also
arranged an overview on business conditions by the American
Business Association of Zimbabwe (ABAZ) as well as meetings
for the mission with key exporters: gold, platinum, and
diamond producers; tobacco producers; and cotton producers.
Ambassador McGee encouraged Kramarenko to convey the
mission’s recommendation to government in a press statement
at the conclusion of its mission. If the mission decided to
issue a statement, Kramarenko said it would possibly
recommend an audit of the RBZ and the return of all budgetary
responsibility to the Ministry of Finance; he said the
mission could not recommend Gono’s removal. Finally, the team
agreed to participate in a March 20 DVC with members of the
Washington donor’s conference.
——-
COMMENT
——-
¶6. (SBU) The IMF mission members are for the most part new to
Zimbabwe. On the eve of their meetings with government, in
particular with the RBZ, we sought to alert them to the
problem of political will and to the incompetence and
corruption of Gideon Gono’s stewardship of the RBZ. While we
were struck by some of the mission chief’s unrealistic
initial thoughts on tax revenue sources, the ensuing thirteen
days of meetings with government officials and the business
and donor communities should provide the team with ample
information to identify where the rot lies and advise the GOZ
on the best way forward. We will continue to encourage the
mission to issue a press statement with recommendations at
the end of their visit, in particular to clarify the notion,
reported on the front page of today’s The Herald, of “IMF
Qreported on the front page of today’s The Herald, of “IMF
ready to assist Zim.” END COMMENT.
MCGEE
(31 VIEWS)
