/ 11 September 2009

SADC cops out on Zim

The Southern African Development Community (SADC) has again copped out on Zimbabwe, in a move seen as retarding the progress of the country’s power-sharing agreement.

Prime Minister Morgan Tsvangirai, Movement for Democratic Change (MDC) leader, had hoped that this week’s SADC summit in Kinshasa would put Zimbabwe high on the agenda, and that leaders would lean on President Robert Mugabe to move on outstanding issues threatening the unity government.

But the region in effect backed Mugabe’s position that no further movement would be made to implement the unity agreement until Western sanctions against him and his ruling elite were removed.

There are now fears that Mugabe will use the outcome of the summit to dig in, avoid any discussion of reform and pressure the MDC to lobby for the removal of sanctions.

Mugabe’s strategy has been to move sanctions to the centre of the debate, deflecting attention from accusations that his party is obstructing political reforms agreed under the power-sharing deal.

MDC lobbyists who travelled with Tsvangirai to Kinshasa failed to convince regional leaders to focus on Zanu-PF’s deliberate ploys to slow political reform.

Zimbabwe had not been on the summit’s agenda and the MDC failed in its bid to have leaders officially discuss it. A Tsvangirai spokesperson told reporters a special summit on Zimbabwe would be held, but this commitment does not appear to have been made.

Mugabe will, therefore, see it as the latest in a series of diplomatic victories over his opponents in the region.

Meanwhile, an unexpected windfall from the International Monetary Fund (IMF) has fuelled the long-running war between finance minister Tendai Biti and reserve bank governor Gideon Gono for control of the country’s economic levers.

Gono last Friday announced a $510-million allocation from the IMF under a G-20 plan to support global liquidity.

A row has now erupted over who should have control of the cash and how it must be used. Biti wants to use it to shore up Zimbabwe’s foreign reserves, which he says have fallen below $2-million. But Gono wants to dole the money out to industry and agriculture, where he says funding is desperately needed.

According to Biti, the interest on the IMF cash will only increase Zimbabwe’s debt burden. Foreign debt stands at $4,7-billion.

But Munyaradzi Kereke, Gono’s senior adviser, has been quoted as saying: ”It’s really unfortunate that as a country and at very senior levels we are publicly almost saying we do not want IMF funding because it’s an expensive loan. Please, let’s be real.”

Although the allocation is part of a broader IMF plan to provide a liquidity buffer against the global financial crisis, Gono wasted no time in claiming credit. The funding, Kereke said, was a result of ”our productive efforts”.

These, he claimed, were now being sabotaged by ”mysterious brawls which seem to put the nation’s interests second to other objectives which we don’t know about”.

Biti has suggested Zimbabwe should not take the money at all, a stance that had frustrated many in business. ”We have less than US$2-million in import reserves. Our arrears account for 150% of GDP,” Biti said.

”There is no way we can take that [cash] up in the context of the arrears and the deficit.”

In a document he presented to Cabinet last week, obtained by the Mail & Guardian, Biti said the IMF loan should be kept in reserve to improve Zimbabwe’s weak balance of payments position.

”Where a member country has a precarious reserve position, as is the case with Zimbabwe, there would be a presumption of saving much or all of the increase in reserves resulting from the SDR [special drawing rights] allocation,” Biti told Cabinet.

Use of the allocation would be discussed with IMF officials at the World Bank/IMF meetings in Istanbul, Turkey, next month, he said.

”Central will be leveraging the gross reserves arising out of the new allocations in support of our current efforts led by the [African Development Bank] to have arrears clearance, debt relief and new additional lending in support of our economic recovery programme.”

The damage to Zimbabwe’s economy ”calls for adjustment rather than financing”, Biti said. The funds should not be viewed ”as substituting donor support or providing liquidity for specific spending projects”.

Government officials said the row is the latest episode in an escalating battle between the treasury and the central bank. Gono’s leadership of the bank is a major issue the MDC said must be resolved to move the unity government forward.

Unable to remove Mugabe ally Gono, Biti has sponsored legislation and introduced policy designed to sideline him and keep him away from the little foreign aid and tax revenues that are trickling in to the country’s coffers.

The two have recently rowed in public over Gono’s campaign to return the Zimbabwe dollar to circulation. Gono has Mugabe’s backing on the dollar, but little support elsewhere.