CENTRAL bank governor Gideon Gono has warned the economy will not recover in “a thousand years” if government officials and the generality of Zimbab
weans continue to work at cross-purposes.
Gono said this in his February 6 letter of protest and another one on February 13 to Finance minister Herbert Murerwa over government policy and their working relationship.
He said although he would now confine himself to his mandate as demanded by Murerwa, divisions in the government were unhelpful as they hindered economic recovery.
“Until as a country Zimbabwe uses the same ladder of development other states used to get where they are, this economy will never turn around in the foreseeable future,” Gono wrote to Murerwa. “Not with the current mentality. Never and not in the famous 1 000 years.”
This was an expression first used by Rhodesian rebel leader Ian Smith.
As revealed in the Zimbabwe Independent last week, Gono and Murerwa have clashed head-on over policy issues as the economy continues to slide. Gono says their relationship has become “untenable” and wanted to resign at one time although he has now decided to stay on.
The battle between Gono and Murerwa is seen as part of Zanu PF’s power struggle now playing out in the government bureaucracy.
Murerwa has accused Gono of acting outside his jurisdiction by venturing into quasi-fiscal activities instead of confining himself to monetary policy issues. The two have also clashed on how to handle issues relating to the International Monetary Fund (IMF) and payment of the institution’s debt.
Gono – supported by President Robert Mugabe – has printed money to settle IMF arrears and fund government projects due to the prevailing fiscal crisis. However, Murerwa is opposed to the move.
Gono has reacted saying he was after all battling with a problem which started under Murerwa in the late 1990s. Murerwa has stood his ground and insisted Gono, now accused by some in government of acting like a “prime minister”, must stop interfering in the Finance ministry’s remit through his quasi-fiscal activities.
Although Gono has agreed to back off, he said all the decisions he had taken were backed by cabinet and key government officials. He also said the $46 trillion he had printed was used for government payments after the Ministry of Finance failed to provide money.
Gono said paper money funded parastatals, local authorities, food and fuel procurement, embassies, the ministries of Defence and Home Affairs and “sensitive state security organs”, as well as pay the IMF US$210 million.
He also said part of the money went towards “urgent refurbishment of sensitive military establishments”, elections, building of infrastructure such as dams, upgrading of airports, railways, power stations, state farms and other critical operations. But henceforth, Gono said, things will change.
“In order to protect the integrity of the central bank, I have directed that no special support shall be given to ministries, parastatals or any other sensitive government payment requirements without the requisite funding from the ministry,” Gono said.
“This should expose the hypocrisy of your advisors in the ministry. Equally, the government overdraft position in the central bank shall be limited only to levels permitted by law.”
He said Murerwa should now accept delays which come with strict adherence to bureaucracy.
Gono said despite Murerwa’s order that money could only be disbursed by the Reserve Bank in “emergency or exceptional situations”, he would not do so because the law does not allow it. The governor also said he would not leave the minister to determine the exchange rate.