International

On the Edge? Zimbabwe Briefly Had Just $217 In the Bank

Zimbabwean foreign currency dealers conduct a transaction from the trunk of a car using money stashed in a cooler box in Harare. i i

Zimbabwean foreign currency dealers conduct a transaction from the trunk of a car using money stashed in a cooler box in Harare. AP hide caption

itoggle caption AP
Zimbabwean foreign currency dealers conduct a transaction from the trunk of a car using money stashed in a cooler box in Harare.

Zimbabwean foreign currency dealers conduct a transaction from the trunk of a car using money stashed in a cooler box in Harare.

AP

"If Zimbabwe was a private company it would have closed down," Zimbabwean finance minister Tendai Biti told reporters this week. At a meeting in Harare, the capital, Biti told a group of reporters his country had just $217 in the treasury, according to the Guardian.

That balance fattened to about $30 million a short time later but Biti reiterated his warning, that Zimbabwe is in an ongoing economic crisis. His dire observation on Zimbabwe's bank balance this week drew so much attention, he spoke to reporters again, saying they'd taken his statement out of context. He told the BBC: "You journalists are mischievous and malicious - the point I was making was that the Zimbabwean government doesn't have the funds to finance the election, to finance the referendum," he said."

Anything Zimbabwe wanted to finance might have been a stretch this week, including elections. Zimbabwean president Robert Mugabe has called for a national vote in March, according to Human Rights Watch. HRW says the country isn't ready for it because Zimbabwe hasn't adopted badly needed political reforms. Zimbabwe estimates it will need about $104 million dollars to pay for the election, notes the Sydney Morning Herald.

Here's one way they might be able to finance it: through Zimbabwe's law partially transferring ownership of foreign companies to Zimbabwean citizens. It's called 'indigenization", and President Mugabe wants foreign banks in the country to be subject to this as well. The New York Times reports that the law calls for black Zimbabweans to own 51 percent of shares of foreign firms in their country, a part of which is used to pay for local development projects and workers. While that affects several companies such as platinum and diamond mining firms, foreign banks haven't been a part of it.

Until this week, that was the view of Zimbabwean central bank governor Gideon Gono. He had said previously taking shares from foreign banks could hurt confidence in the country, especially as it tries to emerge from economic devastation, notes the Zimbabwe Mail. But he's apparently changed his mind. According to AllAfrica.com, the bank governor now says indigenization of foreign banks should go forward in an orderly manner.

The startled Zimbabwe Independent labeled Gono's change of heart a 'dramatic U-turn'. Alluding to the political crisis, the article said Gono 'yielded to the political pressure he has been facing from Zanu PF', Mugabe's political party that controls most of the country and likely, the national election.

Correction at 1:45 p.m. ET, Feb. 4: We mistakenly wrote the word "countries" above when we meant "companies." We did not intend to say that Zimbabwe should try to transfer ownership of foreign "countries" to its citizens. Our thanks to reader John Shepherd for pointing out our mistake.

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