Gono hits back at 'devious' Murerwa

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By Staff Reporter

ZIMBABWE'S central bank chief escalated his row with Finance Minister Herbert Murerwa Friday by claiming he wants to "deviously" trigger a slide back into the hyper-inflationary climate that led to the striking off of three zeroes from the country's currency.

Gideon Gono fired his latest salvo at Murerwa while presenting a review of the Reserve Bank's Project Sunrise, an ambitious plan to suffocate a thriving currency parallel market blamed for keeping an estimated $45 trillion out of circulation in the open market.

Earlier this week, Murerwa did his best to ruffle the governor's feathers when he claimed the strategy to drop zeroes from Zimbabwe's currency was unsustainable. The zeroes could be back by December, Murerwa claimed in Parliament.

The minister told the parliamentary portfolio committee on Budget and Finance that he was not consulted by the RBZ governor before the introduction of the new bearer cheques.

Murerwa said besides the currency reforms, a number of things such as increasing productivity were imperative to turn around the economy.

He said: "The problem we have is of under-production. We have removed three zeros but that is not a guarantee that come December they will not be back."

Murerwa’s remarks, coming against a background of fierce clashes over the printing of money earlier this year, betray a strain between the fiscal and monetary policy authorities.

Murerwa has been trying to stop Gono from straying into quasi-fiscal policy matters, although the governor has ploughed ahead, saying he has been given the mandate by President Robert Mugabe to pursue "development strategies".

A defiant Gono, in comments aimed at Murerwa, hit back Friday: "As I mentioned in my midterm monetary review statement on July 31, 2006, the aspect of Project Sunrise implemented over the last three weeks was only the first phase of currency reforms to be undertaken by the Monetary Authorities.

"A sequel is in the offing but I cannot give further details save to emphasize that there is definitely going to be a follow up phase. Next time round, the implementation process will be short and, therefore swift. It will require less than 24 hours notice and will have much tighter cash limits for allowable deposits.

"In this regard, everyone, especially those who are now threatening to bring back the banished zeroes through whatever devious means they have in mind, should be guided accordingly."

Earlier in the week Murerwa appeared to be distancing himself from the new bearer cheques project, especially after Mugabe rejected the minister’s attempt to introduce a $250 000 bearer cheque in June while Gono was away in Russia.

The new family of bearer cheques was hurriedly introduced by Gono to replace old ones within 21 days.

The changeover has caused turmoil among retailers and the public due to a shortage of smaller denominations. Most retailers have also taken advantage of the transition to raise the prices of basic commodities.

When Gono went to Russia on May 31, Murerwa, together with the central bank’s acting RBZ governor at the time, Edward Mashiringwani, approached Mugabe seeking permission to introduce a $250 000 bearer cheque, but they were turned down. Mugabe confirmed on Heroes Day he had turned down suggestions to introduce a $250 000 bearer cheque.

Zanu PF’s Zhombe MP Daniel McKenzie Ncube also asked Murerwa on Monday whether in pursuing quasi-fiscal policies Gono was not acting outside his mandate. "He was acting in good faith, but it’s a thin line," Murerwa said without elaborating.

Gono, meanwhile, has claimed Project Sunrise has been a success. He said out of about $45 trillion (old values) currency that was in circulation at the time of launching Project Sunrise, a total of $35 trillion (old values) was accounted for through re-banking and withdrawal into the Reserve Bank coffers, leaving a balance of $10 trillion (old values) which has been "trapped into the wilderness of underground markets either inside the country or doing overtime outside our borders."

He said: "This represents 22% of our currency that is missing from our radar. The period under review also netted a total of 9 320 cases with a value of $1,4 trillion (old values) whose owners could not satisfactorily account for this money as at the close of business on 21 August, 2006."
Additional reporting Zimbabwe Independent

Read Gono's full Project Sunrise review statement

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