22 June 2012

Zimbabwe: Zanu-PF Sabotages Biti

ANOTHER explosive situation is looming in the fractious unity government over austerity measures adopted to arrest the collapse of government operations with ZANU-PF and the two formations of the Movement for Democratic (MDC) not agreeing on how they should be implemented.

At last week's special Cabinet session, Finance Minister Tendai Biti presented a catalogue of measures he wants implemented in the wake of a cash crunch choking government ministries.

While Cabinet approved the proposals, ZANU-PF hardliners are girding their loins to forestall their implementation.

Immediately after the Cabinet meeting, the party's spin-doctors swung into action, attributing some of the draconian measures meant to rescue the situation to the MDC-T headed by Prime Minister Morgan Tsvangirai, an indication that there is no longer collective responsibility in government.

While on paper ZANU-PF adopted market-oriented policies when it took steps to deregulate the economy in February 2009, the highlight being the introduction of multi-currencies, in practice the party still favours a populist approach, particularly as the country prepares for make-or-break elections.

The MDC-T now finds itself caught between a rock and a hard place as the proponent and executor of the austerity measures, Biti, cannot go back on his word without suffering a credibility crisis while at the same time there are roadblocks mounted ahead of him.

President Robert Mugabe has also fired a salvo at Biti. He told his party's Women League that he was not happy with the manner in which Biti was presiding over the country's economic matters.

The ZANU-PF leader cited the loss-making Grain Marketing Board which he said was struggling to feed the nation because it was no longer allowed to borrow money to finance its operations as it used to do in the past.

To show the magnitude of the differences, while Biti blamed illegal recruitments by the police and army for bleeding State coffers, the ZANU-PF leader left half way through to preside over a police pass-out parade following recruitments the Finance Minister had said were not sanctioned. In an interview with The Financial Gazette this week, Biti remained hopeful that, if fully implemented, the mea-sures would arrest the haemorrhaging suffered by the country's economy.

Biti has proposed drastic cuts in foreign travel, which as of the end of May, 2012 gobbled US$46 million.

Both President Mugabe and Prime Minister Tsvangirai have been accused of having a penchant of travelling outside the country with huge delegations at a time government is battling to fund operations.

Biti is also proposing the disposal of loss-making entities and freezing civil servants salaries, which has not gone down well with the public workers who earn well below the breadline.

Presently, most civil servants take home about US$250 per month, against a poverty datum line of about US$500.

ZANU-PF has capitalised on the discontentment in the public service over the salary freeze and the fact that the Finance Ministry falls directly under the MDC-T's portfolio of ministries to project its main rival as insensitive to the plight of the civil servants.

Civil servants recently wrote to President Mugabe imploring him to award them a salary increment after they had earlier met the MDC-T leader.

Treasury is also moving to ring-fence resources accrued from diamonds from Marange and from other State agencies charged with revenue collection such as the Zimbabwe Revenue Authority (ZIMRA).

There have been choruses of disapproval from Biti and his colleagues in the MDC factions over the lack of transparency in the distribution of revenue generated from Marange diamonds amid allegations that ZANU-PF could be running a parallel government.

There is therefore a strong push from the MDC formation, which is being resisted by ZANU-PF hardliners, to close perceived loopholes within the system and funnel all the diamond revenue towards funding government operations and resuscitating the country's economy.

Biti is also advocating for the settlement of internal debts between ministries, departments and other public entities to allow them to function properly. Between them, government departments and entities owe each other more than US$200 million. For instance, government departments owe Net*One US$41 million, CMED (Private) Limited US$9,2 million, ZESA US$22,7 million and local government authorities US$44,2 million.

The government also owes its foreign missions. As of December 31, 2011 the diplomatic missions were owed US$24 million.

Local fertiliser and agricultural firms are also owed US$57 million for inputs.

"These government institutions are owed so much to the extent that they are unable to service their own creditors. While they are unable to service their own creditors, the same creditors are unable to meet their own financial obligations," said Biti.

"This creates a vicious circle, which has in turn created a debt gridlock in the economy," he said.

Some ministries are said to have gone for more than four months without getting reimbursements or funding from the Ministry of Finance due to a severe financial squeeze in government.

While agreeing that the government was technically broke, Biti said money has to be found to deal with the domestic debt suffocating most ministries and government departments since a huge inter-parastatal debt would have the effect of defusing the already severely undercapitalised State-run firms' capacity to deliver crucial social services to the economy.

ZESA, for instance, has battled to generate enough power to drive industries, which themselves are warning of a slowdown unless swift intervention is made to improve electricity generation.

At the same time, giving government the daunting task to settle debts incurred by State-run firms' globe-trotting chief executive officers and officials would be as good as condoning inefficiency and mismanagement of the public funds that they control.

"The government has to find the money to settle this inter-departmental indebtedness, which is slowing (down) the economy. It will not be business as usual. If it means getting money from a stone let it be," he said.

But to avoid abuse of funds, Biti said his ministry would be directly in charge of internal debt settlement.

"We don't want heads of ministries or departments even local authorities to use this money to buy 4x4 vehicles," he said.

Biti said it was prudent that the government deal with the rot at ZIMRA and the other revenue collecting agencies, saying corruption at some border posts was bleeding the government dry.

For instance, he said, the government was losing US$45 million per annum through delays at Beitbridge Border Post, the country's busiest point of entry.

While imports are over US$2 billion annually, the country is only realising US$150 million in duty.

He is also proposing sweeping reforms at ZIMRA and at the State Procurement Board, accused of cherry-picking companies for lucrative government tenders.

Copyright © 2012 Financial Gazette. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.