Biti Pledges to Reform Zimbabwe’s Reserve Bank

Zimbabwe’s central bank will be reformed and help from South Africa is crucial for the country’s recovery, according to new finance minister Tendai Biti.

In an interview on Sunday, Biti, who was appointed last week under a power-sharing government with President Robert Mugabe, said he would present a new budget to parliament. He urged Western donors to get involved in rebuilding the country.

“The Reserve Bank has totally discredited itself,” he said. “We must accept that the Reserve Bank is at the core of this economic decay.

“I make no apologies for those statements,” he added.

Analysts say the central bank has ruined the economy by printing money and providing trillions of Zimbabwe dollars to state firms and government departments outside the budget, fuelling the world’s highest rate of inflation.

Prime minister Morgan Tsvangirai’s Movement for Democratic Change wants to curtail the Reserve Bank’s operations and focus it on taming inflation and exchange rate management, which the bank operates independently from the government.

That could set Biti against central bank chief Gideon Gono at a time when strong co-operation between government officials is needed to rescue the battered economy. Biti said he would meet Gono soon.

Foreign investors and Western donors made it clear that funds would not flow to the nation until a democratic government was created and economic reforms were made.

Zimbabwe was looking to South Africa for assistance with “budgetary support or lines of credit”, but adopting the rand currency would not resolve the country’s problems, Biti said. – Reuters