HARARE - Finance minister Tendai Biti (Pictured) is adamant that the Reserve of Zimbabwe Amendment Bill will sail through Parliament before the end of this month, ensuring that central bank governor Gideon Gono will never again dabble in quasi-fiscal activities.“What we intend to do is to restore credibility and legitimacy in the Reserve Bank and we are going to do that through this bill,” Biti said during the taping of a television discussion series, The Transition, which ZTV has refused to air.
“The RBZ Amendment Bill was gazetted on the 16th of August and we hope to push it through Parliament before the end of October 2009,” he said.
The Finance minister, who has been credited with reviving the economy after years of Zanu (PF) corruption and mismanagement, said the RBZ reform legislation was aimed at ending the abuse of power at the central bank.
“If you have a Reserve Bank that plays the dominant position that our bank has played in the last five years, then there is a problem,” Biti said. “In 2008, the Reserve Bank’s economic activities were 24 percent of the Gross Domestic Product. In 2007, this rose to 34 percent. In 2006, they were 32 percent.”
Prime Minister Morgan Tsvangirai stood firmly by his finance minister, saying: The fiscal authority in Zimbabwe is the minister of finance,” he said. “He will set the priorities and the governor is answerable and subordinate to him.
Biti said Gono had abused power through the so-called quasi-fiscal activities that permitted him to assume an omnipotent role in the national economy.
“So we have to deal with these issues of abuse, which were being done through something called quasi fiscal activities, when there was nothing quasi about those activities. The RBZ’s involvement in the economy was to the detriment of the treasury, to the detriment of everyone (except Zanu (PF)),” Biti said.
His remarks are likely to escalate public feuding between himself and Gono. The two men are currently locked in an acrimonious dispute over control of US$400 million from the International Monetary Fund.
Biti has accused Gono of compounding Zimbabwes crisis through dubious activities that saw the RBZ pump millions into financing newly resettled black farmers, most of them Zanu (PF) supporters.
The MDC accuses Gono of providing foreign currency to bankroll the pre-election terror campaign that claimed over 200 lives last year. He also purchased combine harvesters, tractors, motorcycles, generators and small farming implements that were handed for free to resettled farmers by Mugabe just before elections last March, in what analysts described as a clear attempt by the Zimbabwean leader to curry favour with a disgruntled electorate.
Mugabe and Zanu (PF) lost the election despite this investment.
Biti said Gono’s continued tenure at the helm of the RBZ remained an outstanding issue and it was frustrating that the GNU had still not settled the matter 10 months down the line.
President Mugabe is said to be standing resolutely by Gono, insisting he will remain in his job and that he had actually done a fantastic job. Biti said this hard line position was scuttling progress.
In an interview with French news agency AFP last week, Gono, who was last week given the Ig Nobel award (an award for goofy mathematical research) for killing Zimbabwe’s currency, staunchly denied wrecking the economy.
“The immorality and irrationality of the whole argument is that ‘Gono must go because he printed money and he killed this economy.’ That’s a white lie because no single individual can harm or kill an economy,” Gono told AFP. “Whatever I did had authorisation from the government of the day.”
The proposed legislative reform seeks to bring the powers of the RBZ governor under the control of a new board, as well as to clarify the RBZs functions and increase its reserves.
Biti said he hoped the Bill would bring sanity to the central bank, although critics argue that it reduces the banks independence, in sharp contrast to the draft SADC Model Central Bank Law, which seeks to enshrine the principle that central banks in the region should “act independently and without fear, favour or prejudice or direction from any authority or institution”.
Critics further argue the bill gives excessive powers of oversight to the Minister of Finance, who must get quarterly statements showing the state of the reserves, and obliging the minister to direct operations.
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