Govt plans to plug diamond revenue leaks

GOVERNMENT plans to issue a Statutory Instrument containing a clear formula for the calculation and remittance of any dividends from diamond producers it has shareholding in, as part of far-reaching reforms to plug diamond revenue leakages.

The plan is part of measures government has undertaken to implement under an International Monetary Fund (IMF)-supported reform programme.

The IMF's Staff Monitored Programme (SMP) on Zimbabwe, approved by the global lender's managing director, Christine Lagarde last week, runs up to December 2013.

An SMP is an informal agreement between country authorities and the Fund's staff to mo-nitor the implementation of the authorities' economic programme.

SMPs do not entail financial assistance or endorsement by the IMF Executive Board.

This is Zimbabwe's first IMF agreement in more than a decade.
The SMP focuses on putting public finances on a sustainable course, while protecting infrastructure investment and priority social spending, strengthening public financial management, increasing diamond revenue transparency, reducing financial sector vulnerabilities, and restructuring the central bank.

In an attachment to the letter of intent for an SMP to Lagarde, Harare made a promise to Washington to plug holes in diamond remittances.
"This [establishing formula for calculating] is an important step towards ensuring that all diamond revenue is remitted to Treasury, in keeping with government's commitment under the Diamond Policy.
"In addition, all rough diamonds produced shall be sold through a government-appointed agent," Zimbabwe said in an attachment titled: Memorandum of Economic and Financial Policies.

The measures on diamond proceeds stem from the new Diamond Policy for Zimbabwe that was approved by Cabinet last year to give Treasury and the Zimbabwe Revenue Authority (Zimra) a right to access trading and financial records for diamond companies.

The policy gave joint responsibility to the ministries of Finance and Mines and Mining Development to ensure the accurate computation, accounting and repatriation of diamond proceeds from companies in which government has a stake.

"On that basis, by end-June 2013, Treasury will produce a report accounting in detail for the diamond dividends, royalties and other diamond-related cash flows received in 2012 by the Treasury from all enterprises in joint-venture partnerships with ZMDC [Zimbabwe Mining Development Corporation] involved in the diamond industry," government said.

Government told the IMF that it would submit to cabinet and parliament amendments to the Precious Stones Act to incorporate the principles contained in the diamond policy by end of September and end of December respectively.