AN International Monetary Fund (IMF) team has backed Finance minister Herbert Murerwa’s decision to end the central bank’s quasi-fiscal opera
tions which sparked off bitter attacks on the minister from Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono and President Robert Mugabe.
The IMF’s position, said by treasury sources to have been highlighted during consultations between the IMF team, led by Sharmini Coorey, and Ministry of Finance and central bank officials in separate meetings, is likely to form the core of the team’s report which will be the basis of deliberations on Zimbabwe by the IMF board meeting in January.
The position had been reiterated by the mission during the presentation of its preliminary findings at the RBZ on Monday afternoon.
The presentation had been attended by Gono, the three deputy governors, Gono’s policy advisor Munyaradzi Kerere, divisional chiefs and the central bank secretary as well as officials from the ministries of Finance and Economic Development which is headed by Rugare Gumbo.
The IMF team was expected to give a concluding statement for distribution yesterday afternoon. Coorey said this had already been made available to Murerwa and Gono who had the discretion to distribute it to the media.
“We will make a report available (to the public) on Tuesday,” Coorey said yesterday.
Murerwa announced an end to the central bank’s quasi-fiscal operations during his budget proposals two weeks ago, saying all resource allocations would now be made through the national budget under a “credible anti-inflation programme”.
But sources from both the treasury and the central bank said Coorey and her team had clearly backed Murerwa, insisting the RBZ’s quasi-fiscal operations had to be terminated.
Murerwa’s decision, which appeared to have been precipitated by increasing discord between government ministers and Gono over what cabinet members view as Gono’s overbearing influence on government ministries and departments, has received backing from the budget, finance and economic development committee of parliament which suggested that the quasi-fiscal operations were “evidently inflationary”.
Murerwa said during his 2007 budget presentation that a comprehensive package to reinforce policy measures to restore macroeconomic stability had to encompass the “phasing out of quasi-fiscal operations and allocating resources through the national budget”.
His decision received an angry response from Gono who criticised Murerwa for “deliberately distorting the facts on the ground for other grandiose reasons” after Mugabe backed Gono and publicly condemned Murerwa for pursuing “bookish economics”.
The IMF team maintained there had been no comprehensive policy package to address the economic crisis in the country, and expressed concern at the exchange rate regime and the lack of fundamental structural reform like price deregulation, public enterprise reform, strengthening of property rights, and general improvement in governance.