Diamond shortfall could shut Zimbabwe government: minister

Zimbabwe Finance Minister Tendai Biti warned the government could shut down. By Desmond Kwande (AFP/File)

HARARE (AFP) - Zimbabwe Finance Minister Tendai Biti on Wednesday warned the government could shut down, as new diamond sales from the controversial Marange fields are falling far short of expectations.

"Diamonds have to deliver, otherwise the only thing we will be able to do is to pay wages, which means government will virtually close down," Biti told a news conference.

"That's an unacceptable situation, that's an unhealthy situation and that's cause for concern because we are back again to days of a fragile state that cannot look after its citizens in terms of education, health, roads and clean water."

Zimbabwe anticipated $77.5 million from diamond sales during the first two months of the year, but only received $19.5 million, Biti said, attributing the shortfall to the fact that there has not been any diamond auction since the beginning of the year.

In his budget for this year, Biti projected $600 million in revenue from diamonds.

Zimbabwe has a $4 billion budget this year.

Biti also predicted that inflation in the dollarised economy would remain below 5.0 percent.

Tobacco is expected to contribute $300 million to the economy this year while gold volumes will reach 13 tonnes, he said.

"If the price continues to be firm as the $3.60 per kilogramme average then we should realise at least $300 million from tobacco," he said.

"Cumulatively, gold output for the months of January and February 2012, we have reached 1,981 kilogrammes. Our target for the year is 13 tonnes which is a long way from the 40 tonnes that the country used to achieve some years ago."

Biti also said the country has not set aside funds for general elections which President Robert Mugabe is pushing for this year, although Prime Minister Morgan Tsvangirai wants political reforms before polls.