VZCZCXRO0546
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0187 0701620
ZNR UUUUU ZZH
R 101620Z MAR 08
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 2566
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY

UNCLAS HARARE 000187 
 
SIPDIS 
 
SIPDIS 
 
EEB/IFD/OMA ANDREW SNOW AND RICHARD FIGUEROA 
AF/EPS ANN BREITER, ELLIOT REPKO 
AF/S STEVE HILL 
 
E.O. 12958: N/A 
TAGS: EAID ECON PREL ZI
SUBJECT: ZIMBABWE - INPUT FOR CONGRESSIONALLY-MANDATED 
REPORT ON FISCAL TRANSPARENCY 
 
REF: STATE 0016737 
 
¶1. In Zimbabwe, fiscal transparency and accountability exist 
in principle but not in practice. There is a range of 
legislation governing elements of government accounts, 
including the Finance Act Chapter 23:04, which deals with 
income tax, duties and license fees, and the Customs and 
Excise Act Chapter 23:02 that deals with customs and duties. 
In addition, the Government of Zimbabwe's (GOZ) budget is 
publicized in a Budget Statement presented to Parliament 
every year in the form of a Bill that Members of Parliament 
have an opportunity to debate and approve. The Statement is 
disseminated as a printed document, "the National Budget" 
with accompanying Budget Estimates of Expenditure and Income 
for the current and coming fiscal years. The Statement is 
also published in the local press the day after presentation 
in Parliament. 
 
¶2. All revenues and expenditures are included in the 
Statement, but in recent years, the Reserve Bank of Zimbabwe 
(RBZ) has taken over many of the functions of government 
through its quasi-fiscal activities, i.e. activities that 
should ordinarily be undertaken by government, but in an 
attempt to keep the budget deficit figures low, are not 
reflected in government accounts. These activities include, 
among others, deeply subsidized credit extended in an opaque 
manner to farmers and industry. In the 2006 Budget, the 
Minister of Finance at the time stated the GOZ's desire to 
reduce these extra budgetary expenditures as a way of 
controlling inflation, but quasi-fiscal activity has, in 
fact, increased rather than diminished since then. Zimbabwe's 
weakness on fiscal transparency is due primarily to a lack of 
will, not necessarily lack of capacity, as quasi-fiscal 
spending has become a tool of patronage. 
 
¶3. In addition, the budget is eroded by hyperinflation before 
revenue is collected or expended. (NOTE: The officially 
acknowledged year-on-year rate of inflation was about 100,000 
percent in January 2008; private estimates put the rate in 
February at roughly three times that figure.  END NOTE.)  As 
a result, the budget outturn on expenditure and income is 
always much greater than the budget estimate. Consequently, 
for the past several years, the GOZ has presented to 
Parliament a supplementary budget which is invariably much 
higher than the original budget. 
 
¶4. There are no USG programs to strengthen Zimbabwe's 
capacity to develop sound fiscal policies; the Government of 
Zimbabwe falls under Brooke Amendment restrictions and USG 
programs are limited to humanitarian assistance. The World 
Bank has provided technical assistance in the past. 
 
¶5. Zimbabwe volunteered for the World Bank to report on the 
country's compliance with the World Bank-led Report on 
Corporate Governance in December 2000.  In the past ten years 
Zimbabwe has not volunteered for the IMF or World Bank to 
report on the country's compliance with any ROSCs covering 
fiscal transparency. 
MCGEE