Why Gono and Biti clashed over IMF money- Wikileaks


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Central bank governor Gideon Gono clashed with Finance Minister Tendai Biti over the $500 million in special drawing rights granted to Zimbabwe by the International Monetary Fund in August 2009 because Gono regarded it as a windfall while Biti urged caution saying the money should be used to reduce the country’s arrears with international financial institutions.

According to one of the cables just released by Wikileaks Biti told United States embassy officials that President Robert Mugabe supported the policy of debt reduction and this information had already been shared in cabinet.

Gono, however, initially consulted Biti on “how to access these funds immediately without any media attention.” The cable says Gono described the SDR allocation as “a windfall and break through.”

This led to a stalemate where the money was unused for months. In a report back Biti said last month the IMF money had been used for several projects but $215 million was still with the IMF as national reserves with another $140 million earmarked for the country’s obligations with the IMF’s poverty reduction growth facility.

He said $150 was used for agricultural inputs in 2009 and 2010, a further $50 million was used for summer cropping, $80.46 million was spent on infrastructure projects and $19.54 was allocated to the Zimbabwe Economic and trade Revival Facility which is being administered by Interfin Bank.

 

Full cable:


Viewing cable 09HARARE711, GONO STIRS THE POT ON IMF RESERVES

If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs

Reference ID

Created

Released

Classification

Origin

09HARARE711

2009-09-04 10:41

2011-08-30 01:44

CONFIDENTIAL

Embassy Harare

VZCZCXRO8715

PP RUEHBZ RUEHDU RUEHMR RUEHRN

DE RUEHSB #0711 2471041

ZNY CCCCC ZZH

P 041041Z SEP 09

FM AMEMBASSY HARARE

TO RUEHC/SECSTATE WASHDC PRIORITY 4874

INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE

RUEHAR/AMEMBASSY ACCRA 3009

RUEHDS/AMEMBASSY ADDIS ABABA 3124

RUEHRL/AMEMBASSY BERLIN 1553

RUEHBY/AMEMBASSY CANBERRA 2387

RUEHDK/AMEMBASSY DAKAR 2754

RUEHKM/AMEMBASSY KAMPALA 3172

RUEHNR/AMEMBASSY NAIROBI 5617

RUEATRS/DEPT OF TREASURY WASHDC

RUEAIIA/CIA WASHDC

RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK

RHMFISS/EUCOM POLAD VAIHINGEN GE

RHEFDIA/DIA WASHDC

RUEHGV/USMISSION GENEVA 2300

RHEHAAA/NSC WASHDC

C O N F I D E N T I A L HARARE 000711

 

SIPDIS

 

AF/S FOR B.WALCH

AF/RSA FOR K.MOODY

DRL FOR N. WILETT

ADDIS ABABA FOR USAU

ADDIS ABABA FOR ACSS

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

STATE PASS TO NSC FOR SENIOR AFRICA DIRECTOR MICHELLE GAVIN

STATE PASS TO HOUSE FOR STEPHANE LEBOUDER

 

E.O. 12958: DECL: 09/04/2019

TAGS: ECON EFIN PGOV PREL ZI

SUBJECT: GONO STIRS THE POT ON IMF RESERVES

 

Classified By: Classified by: CDA Donald Petterson, Reason: 1.4 (b)

 

1. (C) Finance Minister Tendai Biti has told President Mugabe

and the Cabinet that Zimbabwe should use its new allocation

of Special Drawing Rights (SDRs) to clear arrears with the

international financial institutions as part of a debt

reduction strategy. Conrad Nyamurova, an adviser to Biti

told us that Mugabe supports this policy, which Biti had also

communicated to Mugabe by letter and shared in Cabinet with

Mugabe and ministers. Nyamurova also said that Biti had

reportedly been in contact with International Monetary Fund

(IMF) staff and an IMF executive director to make it clear

that, despite the fact that no consultation is mandated,

Zimbabwe would not draw on its SDR balance until it had

agreed upon a strategy with the IMF. Biti plans to discuss

this with IMF staff at the upcoming annual meetings in

Istanbul. (NOTE: Biti has also discussed with us and with

IMF staff using part of the SDR allocation for a public

investment project. END NOTE.)

 

2. (C) The Governor of the Reserve Bank of Zimbabwe, Gideon

Gono, had caused a degree of confusion regarding GOZ policy

on the SDR allocation. In an August 28 letter, Gono sought

to consult with Biti on “how to access these funds

immediately without any media attention.” He described the

SDR allocation as “a windfall and break through.” On

September 3 Gono made veiled public reference to a new source

of official financing. The next day the state-owned press

gave front-page coverage to Gono’s self-proclaimed success in

winning new support from the IMF in a banner head-lined

article, “IMF gives Zim US$500m”. Gono falsely claimed in

the article that Zimbabwe had already received the funds.

 

——-

COMMENT

——-

 

3. (C) While Biti is dealing with this issue within

government, his bigger problem may be with the public if

civil servants, including teachers, believe the government

has received a windfall of support and is not using it to

raise salaries. Nyamurova said Biti would publicly address

the issue in the near future. END COMMENT.

 

PETTERSON

(13 VIEWS)

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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

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