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Dispute Over Zimbabwe's Central Bank Governor Intensifies


There has been a major controversy in Zimbabwe's inclusive government about the culpability of the central bank in the collapse of the economy. The Movement for Democratic Change party believes that the central bank mainly served the Zanu PF party elite, and has abused its position as monetary authority.

Even before the unity government was sworn in two months ago, the MDC demanded that central bank governor Gideon Gono be replaced.

They accuse him of illegally usurping functions from the ministry of finance and squandering precious foreign currency on President Robert Mugabe's clique.

This became an issue at the cabinet meeting last week. Mr Mugabe said the MDC's allegations about Gono were an attempt to review his administration's performance prior to the formation of the unity government.

Economist John Robertson says he doubts whether Gono or others will be held responsible.

"The government or the reserve bank actually legalized the process that allowed them to transfer funds," he said. "So they would argue, I believe, that the legalities of these things are not to be questioned in that they gave them themesleves the legal right to do them, now the big problem here is the fact that these issues in the end might be trivialities that are preventing them debating much more mportant much urgent issues that the country should be considering."

When Gono's five year term expired last November, Mr Mugabe immediately reappointed him. When MDC finance minister Tendai Biti and others from the MDC came to office they found the economic situation was even worse than they expected.

Gono, whose statements are regularly printed in full by the pro Zanu PF Herald newspaper, issued a statement last week which listed hundreds of imported vehicles handed over to the Zanu PF administration.

He has also admitted taking, without permission, at least $1.5 billion from exporter's and humanitarian agency's foreign bank accounts held in Zimbabwe. He said this was to keep the country going.

He handed out many millions of dollars of agricultural equipemnt mostly to Zanu PF leaders and supporters ahead of last year's general election, won by the MDC.

Gono has said the inclusive government should let bygones be bygones.

"Gono's contribution was that he lengthened the decline process by a couple of years. I think if had not done what he did, the country would have succumbed to the incredibly bad policy decisions some years ago," said Robertson. "But he found ways of printing money. Now that it has collapsed we are totally bankrupt whereas before we would have least been in a position to bring about a recovery with what we had left."

Robertson says that many people allege there were two exchange rates during Gono's period at the central bank, one for Zanu PF and one for the rest of the population.

The reserve bank together with the government, run by the ministry of finance in this respect, legalized a process that gave special privileges to individuals, and the most important was the exchange rate.

Robertson said privileged people could buy foreign currency for a fraction of what it cost ordinary people. He said this allowed the elite to buy assets, such as luxury vehicles and materials to build enormous houses for the same amount of money as ordinary people would spend on a loaf of bread.

Robertson said until the central bank was managed professonally and fundamental issues of governance, such as respect for property rights, were back in place, he doubted whether the inclusive government would be able to attract investment or raise international loans to rebuild bankrupt Zimbabwe.

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