FINANCE minister Tendai Biti has failed to implement the International Monetary Fund (IMF) Article IV consultation proposals seeking an overhaul of the Reserve Bank following a cabinet decision that thwarted his efforts, the Zimbabwe Independent has gathered.
According to an IMF Staff Report compiled by the fund following the routine policy consultations in March, Biti promised to restructure the eight-member central bank board by April after the multilateral institution criticised the central bank for poor corporate governance.
The report was submitted to the IMF executive board for discussion on Monday where government lobbied for the reinstatement of its voting rights suspended in June 2003 over non-payment of arrears.
Government owes over US$130 million to the Poverty Reduction and Growth Facility-Exogenous Shock Facility Trust Fund of the IMF.
The government requires US$8,5 billion from external lenders to stop the decade-long economic meltdown.
Government and the visiting IMF team, according to the report, also agreed that the revised 2009 budget expenditure was understated and higher humanitarian assistance was needed to ensure the provision of critical public services.
Informed sources said Biti intended to remove Gono as board chair and have it chaired by a non-executive member. A number of names for a potential RBZ board chair were being proposed, but the prerogative to appoint the members lies with President Mugabe after consultation with the minister.
â€œThe authorities agreed that RBZ governance needed to be strengthened,â€ said the IMF. â€œAs a first step in this direction, the staff underscored the importance of ensuring compliance with the RBZ Actâ€™s accountability requirements. In line with staff recommendations, the Minister of Finance intends to recommend five non-executive board members who would be appointed by the president by end-April 2009.â€
The board, the IMF report said, should ensure â€œeffective oversight of the RBZ operationsâ€, including a thorough review of 2008 audited financial statements of the central bank and its subsidiaries.
The board, according to the report, would have been tasked with â€œclosely monitoringâ€ the central bankâ€™s international reserves management, and borrowing, guaranteeing, and pledging activities.
Sources said Gono however objected to the move when he wrote to Ministry of Finance accountant-general Judith Madzorera last week, saying that the accountants of the country in consultation with international boards of accounts had indicated this was not possible for last yearâ€™s accounts.
Gono said the Public Accountants and Auditors Board, which regulates accountancy in Zimbabwe, the Zimbabwe Accounting Practices Board and Zimbabwe Stock Exchange, had issued a joint statement on financial reporting explaining why 2008 accounts â€œhad to be in local currency terms and at historic valuesâ€.
â€œSignificant improvement is needed in all areas of economic statistics, and transparency of government and RBZ operations. Priority should be given to timely compilation, reporting, and dissemination of standard monthly monetary and fiscal statistics, financial soundness indicators for the banking system, as well as the reconciliation of debt data with external creditors.
BY BERNARD MPOFU