IMPROVED BUDGET TRANSPARENCY IN ZIMBABWE

UNCLAS HARARE 000289 SENSITIVE SIPDIS AF/S FOR B. WALCH AF/EPS FOR ANN BREITER EEB/IFD/OMA FOR JULIA JACOBY NSC FOR SENIOR AFRICA DIRECTOR STATE PASS TO USAID FOR L.DOBBINS AND J. HARMON TREASURY FOR D. PETERS COMMERCE FOR ROBERT TELCHIN ADDIS ABABA FOR USAU ADDIS ABABA FOR ACSS E.O. 12958: N/A TAGS: EAID ECON PREL EFIN PGOV ZI SUBJECT: IMPROVED BUDGET TRANSPARENCY IN ZIMBABWE REF: A. SECSTATE 28885 ¶B. HARARE 0260 ¶C. HARARE 232 ¶1. (U) The Government of Zimbabwe is a recipient of FY09 foreign assistance, as defined in Ref A, under the Department of State Foreign Operations and Related Programs Appropriations Act (SFOAA). Post therefore provides the following response to the questions contained in Ref A. ¶2. (U) The Government of Zimbabwe's budget is publicly available, and incomes and expenditures are included in the budget. ¶3. (SBU) The formation of an inclusive government in February, 2009 and the appointment of Tendai Biti of the Movement for Democratic Change (MDC),which had been the opposition party, as Minister of Finance, paved the way for the introduction of a revised and considerably more realistic FY09 budget. Soon after taking office, Biti introduced a cash budget (Ref B),i.e. expenditures match revenue, and he prohibited off-budget spending. He also seized back traditional finance ministry powers from the Governor of the Reserve Bank of Zimbabwe, who had mismanaged public finance in the past years. ¶4. (SBU) A recent IMF mission to Zimbabwe concluded that the Government's income estimate for FY09 was overly optimistic (Ref C). In light of the gaping lack of information on private sector activity and its capacity to rebound, we nevertheless believe that the budget broadly reflects actual government incomes and expenditures in this first year of economic recovery in Zimbabwe in over a decade, and that the budget is therefore in compliance with Section 7088(c) of the SFOAA. MCGEE