HARARE, 1 February (IRIN) - The governor of Zimbabwe's Reserve Bank, Gideon Gono, has called on the country's leadership to stop blaming drought and sanctions for its problems and face up to the fact that it is the ruling class that is causing society's ills.

In a hard-hitting two-hour televised speech on his monetary policy review, Gono, who apparently enjoys President Robert Mugabe's support and protection, accused high-ranking government officials of not producing crops on the commercial farms they owned, instead using them as weekend barbecue spots.

"Whilst, traditionally, it has become fashionable to blame successive droughts and illegal sanctions against us for the country's hardships, the reality on the ground does, however, reveal startling contradictions and distortions currently prevailing in the economy," he commented.

All cabinet ministers, their deputies, senior officials of the ruling ZANU-PF party, and senior officers of the army, police and intelligence services were allocated commercial farms that became available during the fast-track land reform programme launched by Mugabe in 2000, which sought to redistribute 4,500 white-owned farms to landless blacks. The European Union and the United States imposed targeted sanctions on members of the ruling elite, including Mugabe, for human rights abuses and the alleged rigging of elections.

As the new owners of commercial farms, the ruling elite were also accorded preferential loans at an extremely low 20 percent per annum, low-priced fertiliser and heavily subsidised fuel, for which they pay Z$330 (US$1.32 at the official exchange rate of Z$250 to one US dollar) a litre, while fuel at public filling stations costs Z$5,000 (US$20) a litre.

Zimbabwe's economy has been in freefall in recent years, with the formal economy shrinking by 65 percent, agricultural production down by 50 percent, unemployment touching 80 percent and inflation running at 1,281 percent, the highest in the world, causing a slew of shortages, including food, fuel, electricity, medicines and foreign currency.

Gono said the "time has thus come that the truth and facts be allowed to speak for themselves, in the interest of building credible policy interventions that will meaningfully deliver Zimbabwe out of the current difficult times."

The governor pointed out that a 50kg bag of fertiliser officially sold for Z$8,000 (US$32) but was not available on the formal market, although it could easily be sourced on the parallel market where it was priced at Z$30,000 (US$120), far beyond the reach of less influential communal farmers.

"The main victims of this misalignment are, unfortunately, the small-scale and communal farmers, who are either not connected enough to secure the subsidised fertilisers, or simply do not have enough financial muscle to afford the parallel market prices, which are well in excess of Z$30,000 (US$120) per 50kg bag."

Gono said the country's leadership was encouraging the growth of corruption and cited the "ridiculous" practices of the state's Grain Marketing Board (GMB), which was buying maize from farmers for Z$52,000 (US$208) a tonne and reselling it for Z$600 (US$2.40) a tonne to the millers. Some millers have then been reselling the  maize, bought at Z$600 a tonne, back to the GMB for Z$52,000 a tonne.  

"These differentials create a fertile haven for corruption, as some millers have been reselling the maize back to the GMB for Z$52,000 (US$208) after buying it for Z$600 (US$2.40). This legal innovation is mostly prevalent among us, the so-called 'chefs', who have resorted to having several grinding mills throughout the country and use our connections at various GMB depots to get access to the maize."

Gono said while subsidies to the new farmers were acceptable, they should not create a dependency syndrome.

"The current mode of support, where the fuel is being allocated to farmers at Z$330 (US$1.32) per litre for diesel, is discouraging our farmers from engaging in agriculture itself, as many are now finding it more profitable and less problematic to simply trade the fuel on the parallel markets instead of (crop) production."

The government has consistently denied the existence of food shortages. In late 2006 the Grain Marketing Board said Zimbabwe was expecting a surplus above its annual cereal requirement of about 1.9 million metric tonnes. However, independent estimates suggested that only 800,000mt of maize was produced, or less than half the country's annual requirement.

Despite calls to devalue the Zimbabwean dollar - officially fixed at Z$250 to one US dollar, an exchange rate available only to those with good government connections, while the US dollar was exchanged on the parallel market for as much as Z$5,000 and rising - Gono left the official exchange rate unchanged.

"We are told that importers and exporters are already doing deals in the parallel market; that the economy has moved to the parallel market already," The Reserve Bank governor said. "So we ask ourselves, what then do you want the governor to do? Continue to devalue and bless the parallel market? If so, to what level? Well, fellow Zimbabweans, let us be real."

fd/go/he

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