Observers See Danger in Zimbabwe Budget Reliance on Diamond Revenues

Experts said that while the Marange alluvial diamond field is rich, it is not clear the companies working it in joint ventures with Harare will declare interim dividends to maintain public salaries

Though Zimbabwean civil servants were pleased this week to see their salaries raised thanks to an infusion of funds from Marange diamonds, observers saw the risk that such revenues could one day fail to materialize, sending the unity government into crisis.

More specifically, they warned that the ZANU-PF side of the government, which controls the controversial Marange field and the flow of diamond revenues, could withhold them to whipsaw Finance Minister Tendai Biti, obliging him to revert to previous pay levels as the new salaries are unsustainable without continual injections of diamond revenues.

Experts said that while the Marange field is rich, it is not clear the companies working it in joint ventures with Harare will declare interim dividends to maintain public salaries.

Economist Daniel Ndlela said higher public salaries will only be sustainable if there is greater transparency on Marange revenues. “Right now we do not even know how much has been submitted to Treasury since the discovery of those diamonds,” said Ndlela.

President Robert Mugabe said at an African Union Summit earlier this year that US$250 million in diamond revenues would allow a pay hike for public workers. But the tranche deposited into the Treasury recently by the Zimbabwe Mining Development Corporation in apparent coordination with the Mines Ministry amounted to just US$27 million.

Economic commentator Masimba Kuchera said the ZANU PF side of the government might one day withhold such revenues to bring down the government.