Zim central bank to retrench 85%

2010-08-29 20:20

Harare - Zimbabwe's bankrupt central bank is to retrench 85% of its bloated staff complement to help it move back into the black and function as a reliable national bank, according to Finance Minister Tendai Biti.

The lay-offs will mark the end of what analysts say was the use of the Reserve Bank of Zimbabwe (RBZ) to prop up President Robert Mugabe's party after years of misrule exhausted the country's finances and led to economic collapse in 2008.

"There are about 2 600 employees at the bank but the board will reduce the staff to around 400," Biti was quoted as saying in the state-run Sunday Mail newspaper.

He said the slashing of staff was the result of new legislation to restrict the bank's operations to managing monetary policy, monitoring the banking industry and to act as lender of last resort.

The changes at the bank are among the few major agreements to have been carried out under Zimbabwe's 18-month-old coalition government between Mugabe and former opposition leader Morgan Tsvangirai, now prime minister.

Tsvangirai's Movement for Democratic Change (MDC) accuses Mugabe's Zanu-PF party of stalling on other promised democratic reforms.

Biti confirmed that the RBZ, under governor Gideon Gono, owed $1.1bn, for which it has been forced by creditors to sell assets. The debt rendered much of its new mandate "academic for the moment," he said.

Under Gono, the bank confiscated hundreds of millions of US dollars from the accounts of major companies and non-governmental organisations.

The money used to pay for handouts to Zanu-PF party members, and to buy vehicles, tractors, fuel and other goods which were distributed to party faithful before elections.

To maintain the spending, Gono had money printed as fast as the bank presses could produce, resulting finally in inflation of 500 billion percent and the abolition of the national currency last year.