Gono accuses Biti of stalling on IMF loan

Biti, who aims to use the money to rebuild the countrys crumbling infrastructure, has insisted the loan will only be distributed after the national budget is approved by parliament in November. These funds are going to be part of Zimbabwes budget provisions, Biti was quoted as saying by the state-run Herald newspaper. I cant break the law, I am a lawyer. These funds are not a substitute for fiscal prudence and fiscal wisdom.

The clash over the funds, which closely mirrors the power struggles threatening the unity government, took a new direction last week, when Biti said he stopped some unnamed officials from abusing money held by the Reserve Bank. This was amid claims that Biti had approached the IMF to block Zimbabwe from using the loan, until the country cleared the US$140 million debt still owning to them. But Biti explained in a press conference last week that he had merely advised the IMF that he be solely responsible for distribution of the new loan.

What we stopped was the unlawful effort to usurp the functions of Treasury and what we actually did was to block the unilateral conversion of (the loan) into liquidity, said Biti. Gono, who wants the money to be immediately deployed to resuscitate crippled parastatals and fund the agricultural and mining sectors, hit back at Biti on Wednesday, saying the explanations for delaying the distribution of the funds were false.

It is necessary to once again point out that precious time is running out, whilst we are theorising and allegedly planning for weeks and months on how to use funds that are readily available for governments use, Gono said in a statement.

The IMF deposited US$408 million into the Reserve Bank last month as part of the US$250 billion disbursed to IMF member countries, which is an effort to combat the effects of the global financial crisis. An additional US$110 million set aside for Zimbabwe, was withheld, until the country clears its arrears with the Fund.

The country already has an alarming pool of debt of almost US$6 billion, and analysts have argued that the country cannot afford to take on yet another load. However, one of Zimbabwes leading banks, Kingdom Financial Holdings (KFHL), said delaying the utilisation of the IMF loan until the time of the budget will slow the pace of countrys economic recovery.

With the Finance minister saying the funds would only be used under a new budget it may be be another four months before the money is used as a new budget will only come into effect with the beginning of a new year, KFHL said.

This may mean that the financial liquidity crunch will continue and it would take longer for companies to increase capacity utilisation to acceptable levels. Independent economic analyst John Robertson meanwhile told SW Radio Africa on Wednesday that he believes the fight between Gono and Biti, which has mainly been voiced by state media, is being deliberately generated. Robertson explained that there appears to be certain quarters in the public media who are highlighting conflict to detract from any positive developments being made by the MDCs Biti, within the Finance Ministry.

I am of the opinion that the conflict being widely published in the national press is not true, Robertson said. There appears to be a deliberate attempt to generate this conflict to undermine any progress made by the unity government.