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(TALKZIMBABWE) Biti buckles under pressure, denies IMF directive

Biti buckles under pressure, denies IMF directive
Mutsawashe Makuvise
Thu, 17 Sep 2009 04:52:00 +0000

FINANCE Minister Tendai Biti was forced to make a U-turn on his directive to the International Monetary Fund (IMF) to block Zimbabwe from using a US$510 million loan availed to it until the country cleared its US$140 million debt to the multilateral lending institution.

Earlier this month, the IMF disbursed US$400 million to Zimbabwe, with an additional US$110 million scheduled for release last week to help the country stave off the effects of the global recession and buttress the economic revival programme.

Reserve Bank Governor Dr Gideon Gono and his technical team negotiated the loan. SDR 262 million, which is equivalent to US$400 million, was received as the first instalment, with the balance expected last week.

Minister Biti wrote to the IMF directing them to block Zimbabwe from using the US$510 million allocation until it clears its US$140 million debt.

The minister’s instructions found favour with the IMF, which immediately wrote a letter on September 9 2009 to Governor Gono, confirming that the Fund stood by Minister Biti’s orders.

Biti last week defended his decision, saying the IMF funds were too expensive. The Fund clarified the issue saying SDR interest cost was only 0,26 percent per year.

After pressure from Cabinet this week, Minister Biti was forced to make a U-turn on the issue; denying that the letter he wrote to the IMF amounted to blocking the loan.

Speaking at a Press conference in Harare yesterday, Minister Biti tried to waterdown his directive to the Fund.

Minister Biti said he had instead advised the IMF that as Finance Minister he was the one solely empowered by the Constitution to manage the money although the Fund confirmed to the RBZ that they had been directed to block Zimbabwe from using the money until the country cleared its US$140 million debt.

"What we stopped was the unlawful effort to usurp the functions of Treasury and what we actually did was to block the unilateral conversion of the SDRs (Special Drawing Rights) into liquidity," said Minister Biti.

When quizzed by journalists, Biti could not reveal who had attempted such "unlawful" conversion of the SDRs.

To liquidate the SDRs, recipients have to find another country to sell to in exchange for hard currency.

The minister said the Government was not yet able to liquidate the SDRs because of the current debt situation, with Zimbabwe owing about US$5,7 billion.

Minister Biti was grilled in Tuesday’s Cabinet meeting over his position regarding the money.

Reports say he made a U-turn after the tough words he received from several ministers, including those from his own MDC-T party, over the issue of the funds.

Minister Biti's directive was out of sync with calls by Prime Minister Morgan Tsvangirai to Western countries and institutions to extend assistance to the country.

The minister, who is also secretary general of the MDC-T party later said "people are putting words into my mouth".

He added: "I have already said we are going to use the money. Is there any video in which I was saying all those things?"

The minister then went on to say the bulk of the money would go towards infrastructure development while provision for lines of credit for exporters would be made.

He added: "We might consider budgetary support."

Dr Gono had proposed the funds be used for the recapitalisation of Zesa Holdings, the National Railways of Zimbabwe, Hwange Colliery Company Limited and entities in the mining and tourism sectors.

He had also proposed to pay off gold producers, non-governmental organisations and other groups owed by Government.

Minister Biti will likely announce the allocations when he presents the 2010 National Budget in mid-November.

"We are going to make sure that the SDR funds are used through fiscal discipline because there is no way we are going to lose the gains of the past seven months," said Minister Biti.

BITI UNDER PRESSURE

Minister Biti had come under increasing pressure, not only from Cabinet, but from various groups in the country for blocking the loan from the Fund.

The Zanu PF Youth League, in a communiqué presented to President Mugabe by that party's Secretary for Legal Affairs, Emmerson Mnangagwa, at the weekend, criticised Minister Biti's motives for stopping the IMF funds.

“The IMF funds shouldn't be stopped by Biti. Zimbabwe needs that money and Biti has no right to stop the funding,” read the communiqué.

The youth conference also lambasted the World Bank for selective payment of salaries of staff in Prime Minister Morgan Tsvangirai's office.

The Minister of State in the PM's Office Gorden Moyo last week revealed that the World Bank was paying salaries for staff in the Prime Minister's Office.

CHINESE US$5BN LOAN

This is not the first time Minister Biti last has been forced to make a U-turn on crucial national issues.

In July this year, the finance minister said he did not know about a US$5billion loan deal that Zimbabwe signed with China through China Exim Bank (CEB).

It later emerged that Minister Biti and Reserve Bank officials on June 8 had signed a Memorandum of Understanding with CEB guaranteeing the loan.

The embarassing episode happened after President Mugabe told reporters in Sirte, Libya on the sidelines of an AU summit that such a deal had indeed been signed, and that the US$5 billion promised would come in tranches.

He said the deal had been agreed before the formation of the inclusive Government. Prime Minister Morgan Tsvangirai also corroborated the story at a news conference after his state visit to the EU and US.

Biti often attacks the media when he is caught out. "That is a story without any foundation, without any credibility, without any legitimacy," Biti said at the time.

"It is sad journalism," he said although it later emerged that a meeting took place which was attended by Minister Biti himself, his advisor Conrad Nyamurova, and an official in his ministry, Mary Takavarasha, Reserve Bank governor Dr Gideon Gono, his deputy Edward Mashiringwani and Dr Gono's advisor Munyaradzi Kereke.

Some of the staff are earning as much as US$7 000 per month compared to about US$155 paid to civil servants.

Labels: GIDEON GONO, IMF, TENDAI BITI

posted by MrK @ 5:18 PM