Gono gets hysterical over IMF loan

The special credit line of US$510 million was extended under a Group of 20 facility to help developing countries deal with the impact of the global economic downturn.

Gono reportedly said Robert Mugabe, Prime Minister Morgan Tsvangirai and Deputy Prime minister Arthur Mutambara – head of a rival MDC grouping – should instruct Biti to tap the US$510 million line to step up the pace of economic recovery.

Mr. Tsvangirai’s formation of the Movement for Democratic Change, of which Biti is secretary general, has been demanding the removal of Gono from his post at the central bank, but Mr. Mugabe, who reappointed Gono in late 2008, has adamantly refused to do so.

"It is necessary to once again point out that precious time is running out, whilst we are theorising and allegedly planning for weeks and months on how to use funds that are readily available for government’s use," Gono said in a statement.

Gono has tried to claim credit for winning the funds, which form part of a global scheme that the IMF offered to all of its members. The IMF says the funds are under the control of the finance ministry.

Biti is insisting that the funds will only be distributed once the national budget has been approved by parliament.

"These funds are going to be part of Zimbabwe’s budget provisions," Biti was quoted as saying by the state-run Herald.

"I can’t break the law, I am a lawyer. These funds are not a substitute for fiscal prudence and fiscal wisdom," said Biti, who is expected to present his annual budget in November.

The finance minister earlier said that if Zimbabwe, which has US$5.7 billion in external debt, drew on the credit line, it would do so in order to rebuild the national infrastructure.

In its weekly market report, Zanu PF linked Kingdom Financial Holdings Limited (KFHL) said Biti’s position could prolong the current liquidity crunch.

Former Finance Minister Hebert Murerwa and Nigel Chanakira owned Kingdom Financial Holdings is supposed to have been siezed alongside other business units of Kingdom Meikles Africa Limited, but the bank is now being used by Zanu PF to give party line financial signals for a political agenda.

“With the Finance Minister saying the funds would only be used under a new budget … it may be another four months before the money is used as a new budget would only come into effect with the beginning of a new year,” KFHL said.

“This may mean that the liquidity crunch will continue and it would take longer for companies to increase capacity utilisation to acceptable levels.”