30 January 2013

Zimbabwe: Biti Extends the Begging Bowl After Empty Coffers Statement

Photo: Cliff Owen/IMF
Tendai Biti, Zimbabwe's finance minister.

Finance Minister Tendai Biti is extending Zimbabwe's begging bowl to the international community, after dramatically stating the government only had a about two hundred dollars left in its coffers.

Biti said on Tuesday that that the country only had US$217 left in its public account after paying civil servants last week.

"The government finances are in a paralysis state at the present moment. We are failing to meet our targets," Biti said.

The government has repeatedly stated it does not have enough money to fund a constitutional referendum or the elections expected this year. Biti said Tuesday that this left him no choice but to ask donors for cash.

"We will be approaching the international community," he said.

Biti reportedly then said that about US$30 million had been paid into the government account the next day. He told the UK's BBC that he made the revelation in order to emphasise that the government was unable to finance elections, not that it was insolvent. Biti told the BBC's Focus on Africa radio programme that his statement had been deliberately taken out of context.

"You journalists are mischievous and malicious - the point I was making was that the Zimbabwean government doesn't have the funds to finance the election, to finance the referendum," he said.

He added: "To dramatise the point, I simply made a passing reference metaphorically that when we paid civil servants last week on Thursday we were left with US$217... but even the following day we had US$30 million in our account."

There is scepticism about Biti needing to beg for cash for elections when the country appears to be doing very well in the mining sector. A top mining official told the AFP news service this week that Zimbabwe sold almost US$685 million worth of diamonds in 2012 and it wants to more than double its output this year. The Chamber of Mines has also indicated that Zimbabwe's total mineral exports from 2012 are worth US$1.8 billion.

The ZANU PF indigenisation drive has also secured US$2 billion that has been channelled into an 'Empowerment Fund'. This fund is controlled by the ZANU PF-led Empowerment Ministry, and is not being made available to the MDC-T run Finance Ministry.

Zimbabwean economist John Robertson told SW Radio Africa on Wednesday that although the mining sector is exporting, the profitability of the companies is low. He said the key issue is the lack of tax being paid by all sectors, and it is tax the government needs to shore up its account.

"The government income from taxation is far less because the industrial sector is far smaller, and profitability has been badly damaged by years of no investment," Robertson explained.

He said the economy is still suffering from years of mismanagement, and "12 years of extremely bad polices that destroyed the country productive capacity." He said the seizure of commercial farms under the land grab campaign saw the destruction of Zimbabwe's production base, while driving unemployment to very high levels.

"When the agricultural sector failed following the confiscation of land, a great many jobs were lost and when we moved into the hyperinflation period, that further limited possibilities of company profits and further reduced employment. So all sources of tax very were badly damaged and this is what we are facing," Robertson explained.

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