Biti, Gono War Escalates

A FIERCE battle for control of the financial levers of government is looming between new Finance minister Tendai Biti (pictured) and Reserve Bank governor Gideon Gono amid indications the two fiscal and monetary authorities are on a collision course.

The fight between Biti and Gono reflects the broader ongoing political struggle for control between President Robert Mugabe and Prime Minister Morgan Tsvangirai which might be played out in several other key government institutions.

Informed sources said Biti and Gono were already fighting a low intensity war, just a week after they started working together.

The two have had clashes before, with Biti describing Gono as an “Al-Qaeda”-like official deserving to be put before a firing squad for his activities as central bank governor.

Sources said Tsvangirai and Biti were pushing for the removal of Gono.

“The Prime Minister and Finance minister want Gono out,” a source said.

“They have not yet come out in the open and directly said they want him gone since joining the new government but they are making concerted efforts to push him out.”

Tsvangirai and Biti have said the Gono issue was being handled by the government leaders.

Biti told the Zimbabwe Independent this week the issue was under discussion.

“It’s being negotiated, that’s all I can say,” Biti said.

Sources said Gono has been maintaining a low profile amidst the gathering political storm. Mugabe is expected to come to Gono’s defence.

A source said Gono yesterday, echoing Kipling, told a close advisor that: “When everyone is losing their heads, you must keep calm.”

In the meantime, Biti has been taking the fight to Gono.

This week alone, Biti took several policy measures which reversed what Gono had been doing, creating a potentially volatile situation.

Biti changed or threw out Gono’s initiatives on a number of fronts as he manoeuvred his way to take charge. He has also said the central bank needs reform.

“The Reserve Bank has totally discredited itself,” he told Reuters last weekend.

 “We must accept that the Reserve Bank is at the core of economic decay.”

First, Biti changed the voucher payment scheme for civil servants which was initiated by Gono, without telling him. He said it was necessary for him to “review and modify” the scheme.

“With immediate effect, all vouchers issued to civil servants as payment of allowances will be redeemable into cash at designated banks,” Biti announced on Wednesday.

“With effect from March, payment of allowances to civil servants will be made directly into their respective foreign currency accounts and therefore the voucher scheme will cease forthwith.”

The sources said these changes prompted an immediate reaction by Gono yesterday who wrote to Biti telling him that what he had done had the potential of creating an “acute foreign currency crisis” and chaos in banks.

Government have a deal of US$1 billion dollars of outstanding emergency payment.

They said Gono indicated that it would be difficult for government to meet the payments because the fiscus was bankrupt and the Zimbabwe Revenue Authority (Zimra) had not yet collected enough income.
Zimra appears to have so far collected at most US$2 million. At least US$30 million is needed to pay a complement of 250 000 civil servants.

However, government had only secured US$5 million to pay the public service in cash through the CBZ. The other outstanding US$25 million was going to be paid as vouchers redeemable at specific companies and shops selling basic commodities, pending the collection of enough revenue by Zimra.

Biti threw out this scheme and introduced cash payments through banks. It is not clear where he got the money from as he refused to reveal the source. Gono, who is not privy to the new minister’s source of the funds, is said to be worried about the situation.

The new minister also directed banks to open foreign currency accounts for civil servants, addressed the issue of pensions, the Zimbabwe Stock Exchange (ZSE), alternative methods of payment, inflation data collection and keeping of corporate accounting records.

Biti visited the ZSE Thursday as part of his mission to review policies or reverse some of Gono’s initiatives.
Besides, Biti this week set aside Gono’s licensing system for traders to sell in foreign currency, describing it as “unnecessary and costly”.

The minister is also going to revise the budget and fiscal policy in which Gono had a major input.

He has also said he will introduce reforms at the central bank in a move which will see him changing Gono’s administrative policies.

To further illustrate the undercurrent of hostility between the two, Gono has been omitted from Tsvangirai’s delegation that is going to South Africa today to look for money to finance government operations and economic recovery.

Biti and Foreign minister Simbarashe Mumbengegwi will be part of the team.

Efforts to get comment from Gono Thursday were unsuccessful.

His office said he was in a board meeting when contacted for comment and indicated that in any case he had a “new approach” of “not commenting on such issues”.

Gono is said to have met Mugabe Thursday after his board meeting to deal with the situation threatening to explode into a major crisis.

The sources said this week’s developments showed a storm was brewing in the corridors of power over Gono’s future.

They said the issue could spill into cabinet meetings and further divide the government.

Mugabe is expected to mount serious resistance to keep Gono.  

This is seen as part of the tug-of-war between Mugabe and Tsvangirai to control the inclusive government.

BY DUMISANI MULEYA