Harare — THAT Finance Minister, Tendai Biti, is one of the sharpest legal minds in Zimbabwe is not in doubt. His legal dexterity, especially where labour and electoral matters are concerned, is quite exceptional.
But can the same be said of his treasury skills? In the court of public opinion, Biti is seen projecting himself as clearly out of his depths.
This is particularly so when rated against his predecessors such as the extraordinarily able Bernard Chidzero (now late) and Ariston Chambati, a gifted think-tank who passed on in October 1995.
Perhaps, the most generous way to deal with Biti's performance since February, when he switched professions, would be to give him more time to learn the ropes in the hope that he may confound his critics in the end.
But the question becomes: Is he willing to learn?
Biti's track record in the past six months -- when he started superintending over the country's financial affairs -- does not inspire any confidence. He has publicly contradicted his principals. At times, he has contradicted himself, which is not a good sign in a field where a misplaced decimal point can actually bring down the markets.
While there are errors of omission and commission that are forgivable, Biti's latest antics are not.
The shoddy manner with which he handled the US$510 million loan disbursed by the International Monetary Fund (IMF) as part of a package dolled out to its 186 members, is unforgivable. In fact, it is treasonous.
The global lender had wired US$400 million of the US$510 million allocation to the Reserve Bank of Zimbabwe. The US$110 balance should have been deposited with the lender of the last resort a fortnight ago, but there are now conflicting signals regarding whether that would happen owing to the kindergarten bungling at the Finance Ministry.
In what can only pass for a moment of madness, reports indicate that Biti wrote to the IMF on September 3 directing the Fund to block Zimbabwe from accessing its allocation until the country has cleared its US$140 million debt with the Bretton Woods institution. Parish the thought!
Biti had been quoted earlier saying the interest-bearing loan was too expensive, implying it would worsen Zimbabwe's indebtedness to the Fund and other multilateral lenders.
But after getting clarification from the Fund, which he should have done much earlier before rushing to put pen to paper, it then turned out that Biti had spoken too soon.
The painful truth which Zimbabweans should now come to terms with is that Biti's gaffe may cost the country a gilt-edged opportunity that could have given the real sector access to affordable funding whose interest cost is 0,26 percent per year.
Because of the high funding costs, lending rates in the country are in the lower and upper limit of eight and 12 percent, which is too prohibitive when compared to the godsend US$510 million IMF windfall.
Zimbabwe had its voting rights suspended in June 2003 over non-payment of arrears. The country owes US$130 million to the Poverty Reduction and Growth Facility-Exogenous Shock facility window operated by the IMF.
Zimbabwe's total external debt, including arrears, amounted to US$4,7 billion as at December 31 2008, of which debt owed by government to international creditors totaled US$3,6 billion and that owed by parastatals and the private sector amounted to US$1,1 billion.
It is worthwhile to point out that the country's failure to pay its arrears has been a result of the economic recession which destroyed Zimbabwe's capacity to meet its obligations.
What Biti and his inept advisers should know is that there is no strategic advantage in rushing to settle IMF arrears when there is a bigger fish to fry. It does not unlock the IMF window for further support neither does it jolt other international partners into loosening their purse strings.
It would have made sense for Biti to direct the funds, which are like the proverbial manna from heaven, into the productive sectors of the economy to facilitate their recovery from years of economic mismanagement.
Zimbabwe requires at least US$8,4 billion to revive its industry and restore health and education facilities, which had collapsed into recessionary heaps due to years of poor funding. It is only when the productive sectors of the economy start to contribute to the fiscus that the government's capacity to repay its loans can be bolstered, not the other way round.
The US$110 million owed in external arrears is a drop in the ocean insofar as expunging the external debt stock is concerned. The money, however, means a lot to local industries that are teetering on the brink of closure because they cannot access lines of credit offshore.
The multiplier effect resulting from investing the IMF funds in the real sector far outweigh the pat on the back Biti might get from IMF officials for settling the arrears.
There is no political advantage Biti's Movement for Democratic Change can gain from such inept reasoning. One hopes that this is just a case of incompetence.
Biti should be reminded that it is the lack of financial support from the IMF and other donors that has significantly slowed down economic revival in the country, whose stability since February is technically supported by the ditching of the country's frail currency in favour of offshore currencies.
Zimbabwe has not been successful in its efforts to court international support. Prime Minister Morgan Tsvangirai's trip to Europe and the US in June only yielded only US$200 million -- a far cry from the US$8,4 billion needed to anchor the revival of the country's economy.
Biti himself has not taken kindly the stiffening of the international community's hand. He even went to the extent of threatening that the country will go it alone. The latest twist makes one wonder whether Biti has now lost his bearings.
The IMF funding aims at providing liquidity to the world economic system.
The allocation is a low-cost way of adding to members' international reserves, allowing members to reduce their reliance on more expensive domestic or external debt for building reserves. It is a prime example of a co-operative monetary response to the global financial crisis.
It had been hoped that the money will temporarily ease the liquidity crunch in the local market which has been failing to stabilise due to lack of major financial support since the adoption of the multi-currency system.
The government is living on a cash budget with current expenditure taking the lion's share of the revenue.
With this significant increase in revenue, it would have been possible for the government to start implementing capital expenditure projects in critically important social areas and critical infrastructure.
The challenges that continue to devour the resuscitation of the Zimbabwean economy are known by our entire political leadership.
Sadly, we continue to see politics of appeasement at play in the inclusive government of the bhora mudondo type. This is not helping matters.
It is taking too long for our political leadership to notice that time of electioneering or playing to the gallery -- whether here in Zimbabwe or abroad -- is over and the electorate is now expecting delivery.
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Perfect!
????
How can Biti call the west unscientific by denying him the money he is desperately asking for industry?
How does Biti come to ask for US$8.4 billion when he does not know nor have any plan in place for US$510 million?
What does Biti, Khupe and Mangoma mean when they say we can go it alone after the west had given PM nothing but US$200million to NGOs?
Can Biti explain what kind of assistance the country needs from the international community?
Answers
Biti is not his own man in finance, he is there to assist the Bretton Woods to circumvent a legal and moral obligation of wiring money to Zimbabwe as dictated by international law governing the body.
All the pressure by IMF members who are NAM members to have the institution un-biasly support lines of credit to Zimbabwe have been doomed thanks to the idiot at Mukwati building.
Bitis stupidness is not even political because you can not subject your supporters to perpetual suffering in order to score political mileage.
It is for everyone to see that our finance ministry is being run by those in support of sanctions.
Bitis actions are not related to incompetence but puppet admin.
This nincompoop with the Zimbabwe briefcase must resign!
Onesoulzim - you said "...to assist the Bretton Woods to circumvent a legal and moral obligation of wiring money to Zimbabwe as dictated by international law governing the body." What are you smoking my friend? Show us exactly where it says that either the IMF or the World Bank must give Zimbabwe money.
The fact that there is no author listed for this article makes it obvious it was Gideon 'I failed Econ101' Gono. Nuff said.
Kats
The World Bank and IMF are neither American nor European banks but are International Monetary and Reconstruction Institutions that are controlled by its 186 member states formed under the auspices of the United Nations Charter at Breton Wood. The banks have legal obligation to serve its members.
The IMF was formed to stabilize international exchange rates, support balance of payment and facilitate development of ALL ITS MEMBER STATES. The IMF has a mandate to offer highly leveraged loans to its members of poorer economies. ALL member countries belong to IMFs Board of Governors having financially subscribed to quotas and signed the Articles of Agreement, The institution is represented by a 24-member Executive Board that conducts votes for loans, credits, BOPs and grants disbursements.
The IMF, as mandated by member countries on 7 August, injected $283 billion in SDRs into global economies to supplement IMF members foreign exchange reserves in order to stabilize liquidity from the effects of western economic recessions. This is direct obligation to pay member countries SDRs according to their quotas, there are no votes required from the executive and the exercise is purely mathematical. Member countries can decide to keep SDRs in their reserves or exchange them for hard currencies as their individual situations dictate. THERE ARE NO OBLIGATIONS NOR CONDITIONALITIES TO THE USE OF SDRs BY MEMBER COUNTRIES!
The WB/IMF had been influenced by Americas ZIDERA Section 4c and the British administration NOT TO ADVANCE ANY MONEY TO ZIMBABWE which is against the international laws governing the institutions. America has voting rights of up to 20% but the SDR disbursements are not subject to voting! IT is then that the institution circumvents usage of the SDRs by implying BITI to put stupid conditions to HIS country as Governor of the IMF that the country needs to pay off the unrelated S139 million dollars loan first to IMF. This could still have been done by the SDR attracting 0.25 interest rate per year.
The US and UK shaped the negotiations of the Breton Woods bank when in attendance on its formation in 1944, no wonder they still employ senior executives with high voting shares. But today, the majority member countries are also members of the NAM who have pressured the institutions to reform and lend money to Zimbabwe without politicizing the World Bank. China is coming clear that it needs high shares invested into the international banks given the recession from the west, stability of chinas reserves. NAM wants the voting rights for developing nations to be topped up to avoid blatant abuse being experienced when Britain and America are using the institutions as a political weapon. Indeed the Britain and USA are of no developmental use to member states as they are also borrowing money including from China and India.
Tendai Biti is the worst African puppet of the west who chooses to please his partys devil backers at the alter of his partys electorate. The west have won in condemning Zimbabwe to economic quagmire and I wonder if Biti will gather his close hungry community (estranged wife, children, thieving brothers, sekuru vake with open posteriors from torn trousers, sahwiras, boyz dzembare, nekufio and bvukas, industrialists, informal traders etc) to celebrate or he will choose to speak his shonglish in an all western triumphant celebration tossing glittering glasses of champagne.
Talking of investor confidence, who will believe that Biti really needs $8.4 billion for the economy and who will lend such money under Biti?
I emphasize that Tendai Biti who loves to call himself some foreign Bismark must just leave government and work for a western regime change NGO. Former finance minister introduced multi-currency system, China is dispatching $5 billion in batches of $900 000 for the economy, SADC is giving what it can to reconstruction. Biti and his cahoots are working tirelessly to reverse such development with no positive input as they can not call out for the removal of ZIDERA section 4c that is based on the return of land to colonialists in ZIDERA subsection 3.
Ref:
http://www.imf.org/external/pubs/ft/survey/so/2009/POL082809A.htm
http://www.forbes.com/feeds/ap/2009/09/22/business-as-china-g-20_6918751.ht ml
http://www.globalexchange.org/campaigns/wbimf/faq.html
http://www.independent.org/publications/tir/article.asp?a=380
http://catalogue.nla.gov.au/Record/1726121
Onesoulzim - you have confused the recent disbursement of SDRs to member states with the ongoing duty of the governors of the WB and IMF to administer thet funds according to their constitution. If Zimbabwe is in default on its general Account, it must clear those arrears in order to qualify for assistance. There is nothing "stupid" about such conditions as to ignore them is to deny other deserving countries the opportunity to avail themselves of those same funds. Zimbabwe is the only country in the world in long term default of its obligations conditions; so ask yourself if you were a Cambodian or a Chilean or a Nigerian; would you be happy that money that could have come to you is no longer available because one country has not settled its debts?
Also bear in mind that the initial decision of the Bretton Woods institutions to restrict their support of Zimbabwe preceeded Zidera and that in order for that decision to have been arrived at, the support of many of the NAM members was necessary for the mandate to be given. Despite the zanu-pf propaganda, the overwhelming majority of IMF/WB members voted to withdraw support of Zimbabwe until it regularised its account.
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