16 April 2018

Zimbabwe: Finance Minister Blames Biti for Cash Crisis

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FINANCE and Economic Development Deputy Minister Terrence Mukupe says former treasury chief Tendai Biti was partly to blame for the country’s recurrent cash crisis.

The Zanu PF official was addressing senators during the question and answer session in the upper house last Thursday.

Asked what measures government had in place to end cash shortages, Mukupe said the problem was, among other issues, a result of scarce foreign currency in the country.

This, he said, has often resulted in much of the bond notes which should ordinarily be channelled via the formal system being diverted towards the black market.

He also said Biti’s cutthroat cash-based approach to government expenditure 2009 created a Treasury crisis that has seen current Finance Minister Patrick Chinamasa resorting to inflating the government debt through Treasury Bills.

“…You still remember when we had the Government of National Unity, there used to be a talk of ‘eating what you kill’ under the Biti-Gono era,” Mukupe said.

“What happened during that era was that there was an expansionary credit programme that was put in place.”

Mukupe said Biti, in January 2013, announced that government had only just $217 and went on to leave office when government had a domestic debt running close to $5 billion.

“What Honourable Chinamasa inherited was basically a bankrupt Ministry of Finance where only what was available was debt,” Mukupe said.

“That resulted in him having to pay for that debt using Treasury Bills. That is why you find that we ended up having a lot of Treasury Bills that came into the system.

“The next thing is that these people who were being paid by Treasury Bills ended up knocking on the doors of the banks wanting to withdraw their money.

“All of a sudden, we have a situation that we have so much pressure and a lot of people queuing in the banks.

“This domestic debt situation, the expansionary credit programme that came in as a result of the ‘eat what you kill’ from the Tendai Biti era – that is the effects that we are feeling now.”

As Treasury boss, Mukupe charged, Biti gave locals the freedom to move huge sums of money unhindered, something he said has been corrected by the current government.

“When he (Biti) introduced the Exchange Control Guideline of July, 2009 if you go to Section 3.1.1 of that document, he actually introduced a situation where he said that all accounts in Zimbabwe were free funds,” he said.

“Then he (Biti) said that what needed to happen is that if you needed to withdraw your money or take your money anywhere in Zimbabwe or outside the country, you did not need to have any paperwork or reason.

“So, you find what ended up happening is that we actually threw caution to the wind in as far as anti-money laundering is concerned. If you have got any doubts, please go and pull the Exchange Control Guideline of July, 2009.”

Mukupe said the central bank has moved to plug the loopholes.

“With the advent of Mr. Mangudya in 2016, we actually started outlawing situations where you can move around with trucks of money.

“We are now a law abiding Central Bank and the Exchange Control Guidelines that we have got in place that is why you find you now have issues of externalisation and illicit financial flows.

“If you have a situation where anyone has got a truckload of money, that person will find themselves in prison. The only amount of money that you can carry on yourself should not be more than $10,000.

“So, we are not going to have any situation like that but if you see that happening, I am sure Minister Mpofu is ready to arrest those people.”

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