Zimbabwe government may 'close without diamond money'

Tendai Biti Secretary General of the Movement for Democratic Change (MDC) addresses a press conference in Harare on October 28, 2008 The finance minister said 70% of government's revenue was spent on wages

Zimbabwe's government could "close" unless projected diamond revenues start to flow into the treasury, Finance Minister Tendai Biti has warned.

He said the mines ministry had informed him that no diamond auctions had been held this year.

Ministries in the unity government are split between President Robert Mugabe's Zanu-PF and the MDC party.

Mr Biti, an MDC member, also said there was no money budgeted for early elections as favoured by Mr Mugabe.

The power-sharing government - with the MDC's Morgan Tsvangirai serving as prime minister - was formed in 2009, following elections marred by violence.

Analysts say it has achieved stability in Zimbabwe, and after a decade of steep decline the economy is slowly recovering, but it remains fragile and tensions are rising again.

With unemployment at 80%, the country's tax and revenue base remains extremely low.

Loggerheads

"Diamonds will have to deliver - otherwise the only thing we have to do will be to pay wages and government will have to close," Mr Biti said.

The finance minister said 70% of government revenue was spent on wages - leaving little else for anything else, without the diamond money.

The mines ministry is controlled by Zanu-PF - and correspondents say the party is seen to be profiting from the diamond sector since a ban on Zimbabwe diamonds was lifted by the industry watchdog.

Mr Biti added said that elections have not been budgeted for - and there is only money this year for a referendum on the constitution and a census.

The BBC's Brian Hungwe in the capital, Harare, says this announcement is likely to put him at loggerheads with President Mugabe.

Mr Tsvangirai and South African President Jacob Zuma - who has acted as the regional mediator between Zimbabwe's rival parties - say elections should not be held before political reforms are made, including a new constitution.

But Mr Mugabe, speaking at celebrations in February of his 88th birthday, insisted that elections must go ahead "with or without a new constitution".

Analysts warn that another disputed election could trigger a similar political crisis as experienced by the country three years ago.

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