Harare — President Robert Mugabe has unexpectedly ordered Finance minister Tendai Biti to set aside a staggering $200 million in his forthcoming national budget to be delivered in November for fresh elections next year.

Biti confirmed that he met Mugabe on Tuesday and was given an instruction to reserve funds for the referendum and fresh elections.

Biti said this means he has to make a special provision of US$100 million for the referendum on the draft constitution and another US$100 million on new elections in his budget.

Parties in the inclusive government agreed that they would hold fresh elections after the constitution-making process with or without a new constitution.

The plebiscite on the draft constitution is likely to be held early to mid next year if the current chaotic constitution-making process does not drag on for much longer, while no one knows when new elections would be staged. Mugabe did not reveal to Biti on Tuesday when fresh elections would be held.

"We have got other challenges that are unique to this budget," Biti told business executives on Wednesday at a breakfast meeting organsised by the Zimbabwe Independent and Ernst & Young. "We have got the key issue of the referendum that electoral experts are advising me will cost US$100 million to run. A referendum is an election.

"Then when is the date of the next election? I went yesterday (Tuesday) and spoke to President Mugabe. I asked him the date of the next election...The long and short of it is that I don't know but the fact of the matter is that I am going to budget for the election next year.

"That means that US$200 million is already gone in an economy such as this one, which is a disaster if you ask me purely from a fiscal policy point of view. Whether it happens or not, I don't know but I have to adopt a multi-layered fiscal policy statement."

Mugabe's directive - which reveals his unflinching determination to have fresh polls next year whatever the electoral environment - is likely to cause a political uproar in government, mainly in parliament, and in civil society given that Treasury is broke. It is not clear why Mugabe is pushing for elections. There are reports that he is rushing for elections to secure another term before his health deteriorates.

Yesterday Mugabe (86) refused to go into details about his health in an interview with Reuters but said only God could decide matters of life and death. A Reuters Harare correspondent, however, described Mugabe as appearing "fit and lively for his age". This comes after persistent rumours that his health is failing. Mugabe did not tell Reuters whether he planned to stand in the next elections or not. However, he is on record as saying he would stand if "the people" say so.

The order by Mugabe for Biti to set aside US$200 million for elections at a time when civil servants are being paid peanuts and school children are failing to attend classes due to lack of fees could provoke a storm of anger among the public.

Government is failing to pay civil servants, provide adequate social services and rebuild the economy due to lack of money. Civil servants earn between US$150 and US$250 a month. Treasury is already under intense pressure to meet government expenditures, civil servants salaries and deliver basic social services.

Government is desperately looking for US$10 billion to rebuild the economy ruined by Mugabe's failed leadership and disastrous policies. Since last year, government has only been able to get barely US$2 billion from donors, bilateral partners and multilateral institutions. Big multilateral institutions are still unable to give Zimbabwe funding due to policy differences and financial restrictions imposed by the United States and European Union.

Zimbabwe, still recovering from the devastation caused by hyperinflation which topped 500 billion percent in 2008 and a US$6,7 billion debt overhang, is also unable to borrow because of its poor credit rating and serious sovereign risk.

Currently, Zimbabwe is trying to get funding from neighbouring countries. Last week Zimbabwe managed to secure a US$70 million line of credit from Botswana. Biti is also negotiating for a R2,7 billion overdraft facility and a R500 million line of credit with South Africa.

Biti said from purely a financial point of view Mugabe's directive to reserve US$200 million was a "disaster". He said there was no "fiscal space" for such a huge expenditure on elections. Mugabe's spokesman George Charamba said he had not heard about the new drive for elections. "I haven't heard about it," he said in an interview yesterday.

Tsvangirai's spokesman James Maridari said he could not deal with the issue and referred questions to MDC-T spokesman Nelson Chamisa who said he was not aware of the latest development of elections. Deputy Prime Minister Arthur Mutambara and MDC-M secretary-general Welshman Ncube were not available for comment.

However, a row has of late been brewing within the inclusive government over the timing of the next elections and the level of Sadc's involvement in any such polls. Regional leaders are increasingly viewing fresh free and fair elections as the way out of Zimbabwe's decade-long political stalemate.

Mugabe has made it clear that he wants early elections with or without a new constitution. Mugabe's position, which he reflected at the recent Sadc summit in Namibia, is that elections should immediately follow the referendum on the draft new constitution whose crafting is underway.

The process is expected to be completed in the first quarter of next year despite that it is dogged by lack of proper organisation and leadership and financial problems. The process is also not inclusive nor cohesive. The Global Political Agreement (GPA) provides a framework for a new constitution led by the three political parties in the arrangement which should lay the basis for future credible elections and political stability.

Tsvangirai wants elections but believes Sadc, guarantors of the GPA, should play a central monitoring role. South African President Jacob Zuma flagged the issue of elections in Zimbabwe at the recent Sadc summit, demanding that Harare must ensure future polls were free and fair, not dispute again.

Mutambara has said while elections were crucial, what was important at the moment was to fully implement the GPA and create conditions for free and fair elections, instead of harping on about polls when the situation on the ground had not changed much.