Thursday, June 9, 2011
IMF wants Biti to handle all diamond dealings
The International Monetary Fund wants Finance Minister Tendai Biti to handle all diamond transactions by transferring the administration of the Zimbabwe Mining Development Corporation to his ministry.
The Bretton Woods institution wants this captured in the Diamonds Revenue Bill that is now before Cabinet and expected to be sent to Parliament soon for consideration. The IMF proposal follows indications by Prime Minister Morgan Tsvangirai that Zimbabwe will use revenue from diamond sales to repay part of its external debt totalling $7.1 billion.
Zimbabwe is following a strict IMF prescription that has restored sanity to the central bank and seen the country's voting rights restored after a seven-year suspension, a step toward normalizing relations with major donors. Zimbabwe is, however, not eligible for financial aid until it clears its arrears, about $1,3billion, to the Fund, the World Bank and African Development Bank.
A letter from a consultant drafting the Diamond Revenue Bill, Brian Crozier, to Biti (seen by The Zimbabwean) says: "The IMF chief of mission suggested an amendment to the ZMDC Act in order to give you power to direct the disposition of the corporation’s revenues.”
He said he had inserted a new section, giving Biti power to issue directives which will in effect place the ZMDC under the supervision of the mMinistry of Finance and ZimRA. Zimbabwe plans to seek relief for 68 percent of its debt from foreign lenders and pay the remainder using proceeds from minerals such as diamonds and platinum.
The resolution of the debt is crucial for Zimbabwe to return to the international community. The Diamond Revenue Bill is set to stir intense debate when it is tabled in Parliament. Biti was not immediately available for comment.
Critics say the ministry of Finance should steer clear of the mining sector and leave the ministry of Mines to handle all mining.