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
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Reference ID |
Created |
Released |
Classification |
Origin |
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
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
(47 VIEWS)
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