Murerwa unwilling to let Zimbabweans face uncomfortable facts

Acting Finance Minister Herbert Murerwa was unwilling to help Zimbabweans confront uncomfortable facts leaving everything to central bank governor Gideon Gono.

This was said after Murerwa presented his mid-year budget review for 2004 in which he was said to have offered tax relief by increasing non-taxable income yet all he had done was account for inflation.

 

Full cable:

 

Viewing cable 04HARARE1281, Mid-Year Budget Statement Is Nonevent

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Reference ID

Created

Released

Classification

Origin

04HARARE1281

2004-07-27 13:34

2011-08-30 01:44

UNCLASSIFIED

Embassy Harare

This record is a partial extract of the original cable. The full text of the original cable is not available.

 

271334Z Jul 04

UNCLAS HARARE 001281

 

SIPDIS

 

STATE FOR AF/S

USDOC FOR AMANDA HILLIGAS

TREASURY FOR OREN WYCHE-SHAW

PASS USTR FLORIZELLE LISER

STATE PASS USAID FOR MARJORIE COPSON

 

E. O. 12958: N/A

TAGS: ECON EAID EAGR EINV PGOV ZI

SUBJECT: Mid-Year Budget Statement Is Nonevent

 

 

1. Summary: Acting Finance Minister Herbert Murerwa's mid-

year speech offered neither recognition of Zimbabwe's

exporter crisis nor innovative prescriptions. Once

again, the beleaguered Finance Ministry has punted the

ball to Reserve Bank Governor Gideon Gono. End summary.

 

Adjustment for Bracket Creep

----------------------------

2. For ordinary Zimbabweans, the only noteworthy aspect

of Murerwa's statement was his elevation of income tax

brackets, a semiannual ritual in this high-inflation

environment. The GOZ's Herald led today with this item

under the overextended headline, "Non-Taxable Income Up."

The GOZ raised the low bracket threshold from Z$ 200,000

to 750,000/month (US$37-140) and the high bracket

threshold from Z$375,000 to 1,500,000/month (US$70-280).

Although Murerwa and the Herald vaguely characterized the

adjustment as tax relief, it merely accounts for

inflationary bracket creep since December. Additionally,

the GOZ tinkered with duty on a few imports, most notably

lowering or removing taxes on commercial or public

transport vehicles. Murerwa made only timid references

to fiscal restraint, probably too little to satisfy the

markets.

 

Comment

-------

3. Speaking obliquely and often in passive voice, Murerwa

further toed the GOZ line by implying Zimbabwean exports

were increasing (measures "are greatly improving

viability and capacity to export") and the GOZ was paying

down its arrears to international lending bodies ("some

payments are being made"). Still, Murerwa and the

Finance Ministry professional staff obviously realize a)

inflationary bracket realignment is not tax relief, b)

exports are falling rapidly, and c) recent GOZ payments

to the International Monetary Fund are insignificant.

Yet Murerwa, who has served twice as Finance Minister, is

unwilling to help Zimbabweans confront uncomfortable

facts. We will see if Gono is more up to the task when

he delivers his monetary policy update.

 

Weisenfeld

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