/ 13 March 2009

Pay up or Zimbabwe deal fails, warns Biti

Zimbabwe's finance minister warns power-sharing government may crumble without further international aid donations.

Zimbabwe’s finance minister gave warning on Thursday that the country’s power-sharing government will fail, with potentially disastrous consequences, unless international donors urgently inject cash into its treasury.

Tendai Biti welcomed Australia’s move to boost humanitarian spending by $6,5-million but said donations channelled through international aid agencies would not save the transitional government that was sworn in last month.

The finance minister, who is also secretary general of the Movement for Democratic Change (MDC), said: “If we fail, the consequences will be dire, such as a military coup or civil unrest.”

Donors said their engagement depended on democratic progress. But he said: “Our capacity to deliver is linked to economic stability and we need help. It cannot be a chicken and egg situation; there has to be a chicken, or an egg, first.”

Biti needs to meet a civil service salary bill — including the politically crucial police and army — of up to $48-million a month out of a seriously depleted exchequer in an economy where inflation runs into millions of percent. He said: “I am the treasury, I am the chancellor of the exchequer, trust me. I guarantee money paid to the treasury will be correctly spent.”

When MDC leader Morgan Tsvangirai was sworn in as prime minister on 11 February he promised to pay salaries in hard currency. His government has so far given a $97 bonus to all civil servants.

Tsvangirai, whose wife, Susan, died in a car accident on March 6 and was buried on Wednesday, has temporarily handed over to the MDC deputy prime minister, Thokozani Khupe. He is resting in South Africa with his six children and close family after accepting a private invitation from President Kgalema Motlanthe.

On Wednesday, Australia became the first donor country to announce an increase in humanitarian aid — split between the British Department for International Development and the UN children’s fund, Unicef — since the transitional government was sworn in. Diplomats said other countries would soon follow suit, starting with Sweden, which will next week announce $9,7-million for a UN fundraising effort for the Red Cross. Britain, which spends $62-million a year, has yet to announce any new initiatives.

Teams from the International Monetary Fund and World Bank are in Zimbabwe to study “how to resume relations” with a country with IMF arrears of $124-million. On Thursday at an IMF conference in Dar es Salaam, Tanzanian President Jakaya Kikwete said: “The economy is almost in freefall. All of us have to lend a hand.”

Donor countries are to meet in Washington on March 20. A European diplomat in Harare said donors’ focus was on finding ways to increase aid while circumventing elements in President Robert Mugabe’s Zanu-PF party who want to divert the money. The diplomat said: “Some of the humanitarian aid money is already earmarked for supplementing health workers’ salaries. We are now looking at how to do the same with teachers’ pay.”

Biti recently asked regional counterparts for $2-billion over the next 10 months but was told first to sack central bank governor Gideon Gono, whose policies were blamed for the hyperinflation. – guardian.co.uk