Patrick Chinamasa, Zimbabwean Minister of Finance HARDtalk

Now on BBC News, it's time for Hardtalk.

Welcome to HARDtalk two with Zeinab Badawi. -- with. Finance Minister

Patrick Chinamasa is the long-time cabinet minister and ally of

President Robert Mugabe. Zimbabwe's economy is once again staring down

at the abyss. Hospitals are running out of basic supplies, more than

half the population is hungry and criticisms of the veteran President

Mugabe are gathering pace. How will he sort out this mess that he

himself must stand accused of helping create?

Patrick Chinamasa, welcome to HARDtalk. Thank you. Thank you for

the invitation. You were Justice Minister for 13 years. Three years

ago you made Finance Minister. Frankly, you were handed a poisoned

chalice, weren't you? Yeah. We found ourselves in difficulties. Who may

know the result of Zimbabwe in a vacuum in the programme. The

decolonisation issue to sort out the issues that caused the armed

struggle. The reaction arose from the fact there was a secession of

hostilities and the British government, during the time of

Margaret Thatcher, wanted to make resources available. Let me make

this clear. You say the present problems, which I will talk about

with you, our role because of the British? -- are all. Nothing because

of ZANU-PF? Nothing without? As you know, Zimbabwe, up until the

sanctions, was able to meet its international obligations. We had a

functioning economy. But that was undermined by the sanctions which

crippled our capacity to honour international obligations. We got

into this. The exercise right now is to try to get us out of the hole

which we were put into 16 years ago. OK. You brought up the issue of

land. We have real food shortages now in Zimbabwe where the United

Nations, UNICEF, they see that 37% of households in Zimbabwe go hungry.

-- say. That is not true that we are going hungry. You want to argue with

the United Nations? To make sure every person stays full, we are

importing food and distribution has been going well. Can I just say...

They are not going hungry. The system of distribution works.

UNICEF's director said in March this year we have not seen these levels

of malnutrition in more than 15 years. The United Nations is

appealing for help. But, OK, you say no one is, the United Nations says

otherwise... As I am telling you, as I speak to you, we are putting

food... 70% of your food is imported. Agricultural output this

year has been much more than we expected. And we are buying and

distributing it. You import 70% of your food needs. Yeah. When you look

at how rich Zimbabwe could be. You brought up this issue of farming and

land and you blame it on the former British colonial power, but 4.3

million hectares of arable land exists in Zimbabwe but only 2

million was cultivated in the last season. Not because of the climatic

shocks South Africa has gone through, natural problems, but

because of the woeful lack of investment by your government over

many decades. Like a mentioned, everything can be traced back to the

stand-off with those countries which imposed sanctions on Zimbabwe. It

undermines our culture. Clearly, I admit, it could be unproductive due

to lack of farming because of lack of funding. These are issues we are

seeking to resolve. We need to resolve those issues especially to

do with accommodation. You accept state support to the agriculture so

has been inadequate. -- sector. I admit that. I want you to understand

the origin of that problem. The origin of that problem. OK. The

Zimbabwe Farmers Union says the country needs 2 billion US dollars a

year to revive the farming sector. I would put it at more than that. What

is your projected spending for 2016? It has been inadequate. I can tell

you the figure, minister. 1.5 million when you need 2 billion.

Like I told you, there is no access to funding. It is a fraction. Yeah.

There is no access to funding for agriculture. That is the major

problem. The lack of funding is a rising from the stand-off between us

and the traditional partners. -- arising. But you have $15 billion of

revenue from the diamond industry in Zimbabwe which your president

himself, Robert Mugabe, said in March had been looted and simply

disappeared. I admit... There is money stability is potential in our

economy, there is no doubt about that. But you aren't right to try to

ascribe it to bad management. It hasn't been. The land issue was a

revolution in itself. I have moved on from that. I wasn't

criticising... The way we were heading with the economy... I wasn't

criticising... Let me come back to the 15 billion. What we are saying

is, over the years, there has been an economic loss arising from

mispricing. To put it differently... OK... It is mispricing. The problem

that we know happens in all developing countries. The mispricing

of commodities over a period of time. Yeah, you can also put it to

the effect that in that case we were caught sleeping. But the truth of

the matter is that it is coming from mispricing. It is an issue now

without we are interrogating. -- now that we are. We started this bit

here with you saying that you don't have the money to put the investment

into the farming sector that you say you would like to give. It is just a

fraction. I said there is money but the suggestion is it isn't going to

the right places. Zimbabwe is the world's eighth biggest diamond

producer. There is a lot of money that could develop just from that

industry alone. As Global Witness themselves say. We are looking at

that sector. I am sure you are aware that we have descended on the

downward sector to restructure it and consolidate the companies.

Companies that were operating in that sector. It has become difficult

to carry an oversight over all those companies. OK... We acknowledge that

there has been a mistake. Who is looting this money? It was a

Zimbabwean toolmaker and columnist quoted on the BBC website says no

enquiry and no arrests, just a $15 billion hole in the nation's offers.

It is an economic loss that we have suffered. Not just in diamonds, but

also across the wider spectrum. -- across. That is to do with the

invoicing of raw materials and imports. It is a matter that we are

interrogating with a view to coming up with the necessary systems to

prevent that coming up again. Wait a minute. The mining and mayoral

sector needs to be watched to make sure systems are put in place. --

mineral. I will give you an idea of who is doing the looting of the

diamond wealth of Zimbabwe. Global Witness, a prominent group, they say

that revenues from the diamonds are mined and marketed outside

government control and that is propping up Robert Mugabe's

oppressive regime. That is not true. OK. The point is, I want to

emphasise the point, it is an economic loss arising from

mispricing. We are going to, not just for that sector... The

government will have to make sure that Zimbabwe has more than a 50%

stake in each of these companies? In the sector we have started with a

consolidated company right now owned by the government. That won't happen

in the future, theft? Already, what has already been done with

transparency, we are now able to get, on a daily basis, production

figures which we did not used to get in the past. You have a huge

challenge. I started saying you have a poisoned chalice. We talked about

food, a basic need of course. Of cost. Another is healthcare. The

state of your bottles. Ghastly. -- hospitals. Out of date. No

painkillers. Yes. As long as we admit the Genesis of the problem.

When sanctions were imposed we no longer became a functioning economy

overnight. The medical sector collapsed. The sanctions weren't

there from day one in Zimbabwe. From 2000. Exactly. Not from 1986 the

pillow yes. -- 1986. The sector was in good condition. So was the

agriculture sector. You are not understanding the challenges. We

have remained in pole position with respect to all those things. 1980.

Look at life expectancy. 59 .5 years. It is now 57. 57.5. The

sanctions are not... You can't just blame sanctions. That is part of a

small number of the population. The wider population. If you are talking

about those life expectancy is, they are to do with a smaller population.

-- expectancies. Since independence we have expanded education and

healthcare. And I think we should be given credit for that. But...

Something that was not there before Independence. Only President

Mugabe's government is able to undertake a look at the entire

population. We have just talked about the hospitals. Some of

Zimbabwe's major public hospitals are so poor they cannot even provide

basic painkillers. Six cases of typhoid have been confirmed with

more expected to emerge in. You might have a typhoid outbreak.

UART... You are going on the negative. I am not. There are good

success stories. The effect that after this pounding we have remained

resilient and are able to have any help system still worth talking

about is good credit for us. It is just that you are not appreciating

that. These are not my words, can I tell you who it is? The health and

childcare minister. He said the ministry concerns is that the

government should do something urgently about is dumb at this. You

are being asked to sort out this mess. -- about this. I explained to

my colleagues and whoever bothers to listen. We are coming from a very

bad situation. It is eight poisoned chalice, as you said. --A. You

rightly pointed out. To come out of that situation will take time. It is

a process. Above all, we need to have an economy that is performing

so that we can address all those issues that challenge us.

But people are now openly criticising the government. Even

Robert Mugabe himself, the Zimbabwean broadcasting organisation

put out a report blaming the government for the latest drug

shortages, and the state broadcaster is rarely critical of the ruling

party. What they are now saying, and it is not just the state

broadcaster. You've got young people inside and outside Zimbabwean saying

enough is enough. You know, the authorities are being openly

criticised, even as I said one of your colleagues are saying something

has got to be done about this woeful state of affairs. Yes, something

which we have now crafted a path out of all of those challenges. But it

is, -- has to be understood it a process, and not an event. We need

to get all the factors together to make the economy grow again, which

it is not. Yes, but when people look at that... I have to say this,

really, the President's daughter gives birth recently in Singapore,

and we have discussed how about the hospitals are, maternity health and

particular is awful, and they see the President's daughter getting off

to give birth somewhere else. What do you think most Zimbabweans would

think of that? No, I think I have already said. But what do you think

of that particular example? We accept that the health situation is

not where it should be. And if you have got money, as she clearly

has... And we are working very hard to improve the situation. You don't

want to comment on... It is not a it is not an event, it is a process.

But you are not going to comment on the fact that Zimbabweans might get

fed up when they see that the hospitals are unable to treat the

sick. What is your opinion of the President's daughter going abroad?

We should give a situation where we can, by all means, make sure that

most Zimbabweans are treated at home and not outside. So the situation

where some Zimbabweans feel that they should go outside the country,

clearly, it needs attention. And that is precisely what we are

saying. We need are performing a economy in order to make that

happen. You are trying to now open up new credit lines with the IMF and

the World Bank. Sure. You want to pay off the arrears not on the

principal loan but so you can get some money to prop up your economy.

What it is a bit ironic, isn't it, now, that the Zimbabwean government

is trying to get help from the very same institutions of whom a large

number of their members are the very people you have blame for getting

you in this mess. No, please get this clear. We are a shareholder in

the World Bank. We are a shareholder in the African development bank. We

are a shareholder in the IMF. The ones that call the shots countries

you criticise. For your information, even with the African development

bank, we are the largest shareholders in Africa. What about

the IMF and World Bank? Yes, all we are doing with the engagement is

trying to enjoy the benefits of our ownership, access to credit. And if

it turns out that we cannot enjoy those benefits until we create our

arrears. So the engagement is about clearing our readers so we can enjoy

the benefits of our membership. And we are not embarrassed by that. OK,

so you are going to hope. Have you had a good reception? Yes, we have

had a very good engagement. In the engagement is not an overnight one.

We studied almost when I came in as Minister for Finance. It had just

started. We been waiting on this programme, and we have been meeting

our targets. Quantitative and social targets. Last targets we met, were

December last year, the IMF is reasonably happy with the way we

have been running the economy. All right, but confidence is very, very

low. Sure. We know you started using the US dollar in 2009 when your own

currency was destroyed by hyperinflation. And now we see long

queues formed by depositors at the banks in Zimbabwe, seeking their

money because there are worries about cash shortages, and you want

to bring in one new measure aimed at halting the flow of US dollars from

Zimbabwean called Bond notes, which would act as a kind of cash

substitute, only in Zimbabwe, they wouldn't have any value outside the

country. And this is increasing anxiety for your country. No, at Uni

began to understand a unique situation. We are one of three

countries in the world which don't have their own currency. Which means

that we don't have a policy tool to address any shocks that happen,

whether they are external shocks or internal shocks. But worse for us is

that we use the US dollar for financing domestic transactions,

whatever they may be. And we use the US dollar for paying mortgages, no

other country has ever done that, for buying stocks on the market, we

use the US dollar. And our difficulty arose when the US dollar

started to appreciate. I understand the reasons, but it is causing

anxiety. Yes, we know, but when people are faced with change, and we

needed to change. And there is no person right now internally or

externally who can say that the usage of the US dollar for domestic

financing is at a solution. And it is through the back door, is it? It

is not. What is coming in is an export incentive. It is causing a

lot of problems. I will just tell you, a shopkeeper north of Harare

says it is a zombie money made from nothing. Exporters are not

complaining because this is to benefit exporters, because our stock

of value, US dollars, comes from exports. And we want to incentivise

the exports. You want to issue bond notes. Bond notes will only be

issued relative to the volume of exports. No exports, no issues of

bond notes. And it is backed, by the way, by a 200 million US dollar

facility from the African support bank. It can only come from

people... You will have to calm the worries in your own country. The

words I getting now is that they are too late in coming. OK, well, that

is a view of some people but the Zimbabwean investment authority

chairman says there is very little support at a recent meeting of

delegates who said they are opposed to it. But you know, this economic

uncertainty is backed by political uncertainty because your president

is 92. With all respect to somebody his age, there is no succession

plan. This country has the right to travel its own path in history. And

in the case of our President, yes, he is 92, but you must also know the

long path he has travelled, almost since 1958. So he has definite views

about the destiny of Zimbabwean. And he remains in place to ensure that

the trajectory he wants to set for Zimbabwe will be there even after he

is gone. So... People are beginning to call out now that they think it

is time for him to go in the country. They are beginning to say

that. Good grace, his wife, I must ask, good grace, his wife, succeed

him? She remains a very solid, political, formidable force in

Zimbabwean and all the instability that you are talking about is not

within... So it won't be Grace, who succeeds him, because she got a

Ph.D. In five months. Please, do not use the platform to insult her. She

is not a subject for discussion. We are talking about the age of our

President, and I am saying that as far as Zimbabweans are concerned, we

are happy. And aspire as we are concerned, we are happy. And the

President wants to leave this country on a trajectory in terms of

values and trajectory, and as far as bubbly and are concerned, we are

saying anyone who wants to talk on this, feel free. And if the

population agrees with them, of course. It means the result will be

otherwise. But we should not be dictated to when we choose our

leader. The Finance Minister of Zimbabwe, Patrick Chinamasa, thank

you very much for coming on HARDtalk. Thank you. Thank you.

Your impression of Monday's weather will have been dictated by just how

close you were to an area of low pressure, this area of cloud,

which brought a fair amount of rain to some parts of the British Isles,

Lull in proceedings for Tuesday, then Wednesday and Thursday sees